LOCAL EXPLORER TACKLES KEY METALS IN LARGE GRANITE SYSTEMS...

LOCAL EXPLORER TACKLES KEY METALS IN LARGE GRANITE SYSTEMS

Sydney - Wednesday - May 14: (RWE Aust Business News)
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OVERVIEW
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Auzex Resources Ltd (ASX:AZX) spent a lot of money in the March
quarter and much of it seems to have paid off.
The company has been using the latest state-of-the-art geological
technology to find key metals such as molybdenum, gold, bismuth, silver,
tin and tungsten.
It is an explorer, targeting world-class multi-metal ore bodies
that occur within large granite systems.
Auzex Resources aims to increase the probability of discovery in
the most efficient way.
Yesterday the company announced to the ASX that results from
exploration at the Khartoum tin project in north Queensland are
compelling and indicate at this early stage the potential for the
discovery of a new world-class tin deposit.
Spectral processing of satellite imagery has highlighted the
considerable potential to increase the scale of the Khartoum project
within the company's tenement, outside of the area defined by current
exploration.
Exploration to date suggests a mineralised system with a
conceptual tonnage potential of 80 to 120 million tonnes, averaging 0.2pc
to 0.3pc tin based upon the areal extent of greisen tin mineralisation
discovered within the project area, and the reported results of the
company's geological mapping, sampling and drilling program.
There has been insufficient exploration undertaken to define a
Mineral Resource at this time.
The Khartoum tin project is located approximately 100km southwest
of Cairns and 20km northwest of Mt Garnet and covers the Elizabeth Creek
Granite that contains over 50 tin, tungsten, bismuth and gold
occurrences.
About 15,000 tonnes of tin ore at an unknown grade is reported
from historic mining of eight mines in the area.
Auzex commenced exploration in mid 2007 focusing on a 9km by 3km
zone covering a number of known tin occurrences and old workings.
Soil sampling identified fifteen highly anomalous tin areas with
values up to 1.8 per cent associated with extensive greisen.
Follow-up channel sampling of outcropping greisen targeted twelve
zones of mineralisation within one of the main anomalous areas.
Best results included 5m at 1pc tin, 35m at 0.38pc tin and 40m at
0.30pc tin associated with anomalous Ag, As, Bi, Cu, In, Pb and W. In
December 2007, five RC holes and one diamond drill hole were drilled to
test the best channel sample results for a combined total of 528m,
comprising 383.8m of RC and 144.2m of diamond core.
All holes intersected the targeted greisen mineralisation.
Visible coarse cassiterite was logged in the diamond drill hole within
the greisen alteration.
The drilling intersected greisen mineralisation from surface to
depths greater than 150m.
The mineralisation remains open in all directions. Metallurgical
testwork was undertaken on a 40 kg sample of diamond drillcore (intercept
from 78 to 116m) averaging 0.26pc Sn.
The interval comprised a representative sample of fresh tin
bearing greisenised granite.
Preliminary results of sulphide flotation work at a grind size of
80 per cent passing 106um indicate a low loss of tin to the sulphide
concentrate and low sulphide in the tails, which are the feed for tin
recovery using gravity.
Initial gravity testwork completed at an 80 per cent passing
106um grain size showed that the tin (cassiterite) grains were not being
completely liberated at that grind size.
This diminishes the ability of gravity based techniques to
separate tin from gangue (or host) minerals. Nevertheless, a combined
recovery of 71 per cent tin was achieved which is typical for this type
of mineralisation.
The testwork is continuing at a finer grind size (80 per cent
passing 75um), which is expected to improve the recovery and produce a
saleable concentrate.
A suite of thirteen polished thin sections from Khartoum diamond
core were studied to document the nature of the Khartoum tin
mineralisation, including the presence and proportion of cassiterite
versus stannite, cassiterite (tin) grain size and the sulphide species
present.
The samples are mostly of coarse grained leucocratic granitic
rocks overprinted by moderate to intense greisen alteration, comprising
muscovite (-sericite)-quartz with minor fluorite and trace carbonate.
Many of the samples contain disseminated, as well as locally
vein-hosted tin mineralisation. Cassiterite is the dominant tin species
present and stannite (an uneconomic tin mineral) is very rare.
Cassiterite is mostly fine grained (<0.1mm or 100um), but forms
aggregates up to several millimetres across in more strongly mineralised
samples.
Sulphide minerals present include sphalerite, pyrite,
arsenopyrite, chalcopyrite and galena, which are most commonly
disseminated as part of the alteration assemblages.
A batch of 20 high grade tin diamond and RC drill samples
(ranging from 0.37pc to 3.00pc Sn) were submitted for analysis for 12
elements often associated with this style of mineralisation (Ag, Ce, Ga,
Th, W, Bi, Mo, In, Sb, Se, Te, and Ge).
Results indicate that the greisen mineralisation is also
anomalous in silver, indium and gallium associated with recoverable zinc
and copper sulphides.
A total of 195 composite (5m) rock chip samples have recently
been collected from 50 channel sample traverses across greisen alteration
located in the Boulder-Ahmets region covering a 13 sq km area.
Additional greisen zones have been identified during the channel
sampling program.
Spectral processing of satellite imagery was carried out to map
additional zones of greisen mineralisation.
This technique has successfully mapped the distribution of known
greisen and identified new areas of greisen mineralisation.
These areas have been prioritised for follow-up mapping and
channel sampling.
The results strongly support the view that there is considerable
potential to increase the size of the Khartoum project within the
company's tenement, outside of the area defined by current exploration,
and that the area of greisen mineralisation may be up to ten times
greater than sampled to date.

SHARE PRICE MOVEMENTS
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Shares of Auzex Resources yesterday rose 16c to $1.09. Rolling
high for the year is $1.75 and low 75c. The company has 30.3 million
shares on issue with a market cap of $33.1 million.
Meanwhile, drill results the Kingsgate molybdenum-bismuth project
located at Glen Innes in northern NSW look encouraging.
Further positive assay results have been received since the last
update on the resource drilling program at Kingsgate. Better
intersections include:
7m at 0.871pc Mo and 0.256pc Bi from 30m; 3m at 1.676pc Mo and
0.461pc Bi from 14m; 5m at 0.872pc Mo and 0.542pc Bi from 13m.
Initial assay data has been forwarded to Mining Associates for
the commencement of resource modelling.
It should be noted that the modelling completed for the
feasibility study will cover only 10 per cent of the entire project area.
All pipes drilled to date remain open along plunge. There are a
further 98 pipes mapped in the area that have yet to be drilled. The
intention of the drilling program is to establish a resource to sustain
mining operations for a minimum two years. Most pipes will be drilled
after commencement of operations.
Following successful completion of the third phase of drilling,
both drill rigs have been demobilised with activity expected to resume in
May.
Work on key components of the feasibility study for mining at
Kingsgate is progressing well.
Work completed to date includes acquisition of detailed regional
geophysical data, clarification of Native Title and cultural heritage
over the project area, detailed geological mapping of the total project
area, acquisition of up to date aerial photography, development of a DEM
from the aerial photography, and environmental studies.
Work outstanding includes resource drilling and modelling,
finalising metallurgical testwork for bismuth and quartz, updating
process design and plant specifications, marketing of Kingsgate products,
and water quality studies.
This phase of the resource drilling program at Kingsgate is
nearing completion, with 131 holes drilled since the last update in the
December quarterly report.
Holes were drilled vertically to a depth of between 2m and 108m
(average 46m depth). The drilling to date has been at two to eight metre
spaced centres on drill lines 20 to 40 metres apart. The aim of the
current program is to test for new pipes and define the plunge length of
the pipes tested in the phase one program.

BACKGROUND
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Auzex Resources joined the Australian Stock Exchange list in
October 2005.
The company is an explorer, targeting world-class multi-metal ore
bodies that occur within large granite systems.
It has a wholly owned subsidiary, Auzex Resources (NZ) Pty Ltd,
incorporated in New Zealand in October 2003, to be the applicant and
holder of the New Zealand permits.
Auzex Resources's focus is on major gold, molybdenum, tungsten
and tin deposits associated with granite. Research over the last 10 years
has provided understanding of how these deposits form.
Past exploration for large-scale intrusion-related gold deposits
has focused on porphyry copper-type environments as potential hosts, with
considerable success (such as Cadia and North Parkes in NSW; Grasberg in
Indonesia).
Regions where the dominant metal species have included elements
such as tungsten, tin and molybdenum have traditionally been ignored for
gold exploration.
Gold-bismuth is not the only economic metal association that
occurs in the granite environments on which Auzex is focused.
Molybdenum, tin and tungsten are also common, and like gold can
form very large disseminated deposits.
The recent increase in metal prices make all of these metals
attractive economic targets.
The Kingsgate project is located 20km east of Glen Innes, a well
serviced regional town on the main inland highway between Sydney and
Brisbane.
Historically, the Kingsgate mine was the second largest producer
of molybdenum in Australia with much of the ore mined from a swarm of
high grade, near-surface quartz pipes.
A total of 350t molybdenum and 200t bismuth was mined between the
1880s and 1920s.
Very little modern exploration was undertaken until Auzex
acquired the project in 2003.
At the time of acquisition, molybdenum was trading at less than
$US10lb and bismuth less than $US5lb - prices as at early March were Mo
$US34lb* and Bi $US12lb.
Over the last few years, Auzex has completed several drill
programs and a trial mining/bulk sample operation. Results formed part of
a scoping study completed in mid 2007 with the company deciding in late
August to advance the project to Feasibility status.
The north Queensland project areas are situated between Cairns
and Mount Surprise. They consist of the Lyndbrook group of tenements,
Khartoum and West Tinaroo. All tenements are 100 per cent held by Auzex
and were acquired as a result of the company's extensive prospectivity
modeling studies focusing on Intrusion-Related granite deposits.
The New Zealand project is located on the west coast of the South
Island, situated between the townships of Nelson in the north and Ross in
the south.
Much of the project area covers the northern extension of the
Reefton goldfield, with new discoveries awaiting development.
Historical mining within the west coast area primarily worked
gold bearing lodes hosted within Greenland Group lithologies.
The Reefton mesothermal goldfield produced 2.1M oz gold from 84
mines, at an average grade of 16 g/t between 1864 and 1951.
Six target prospects have been identified including Kirwans
tungsten prospect, Kirwans gold prospect (Buller), Mt Rangitoto gold
prospect (Ross), Buckland gold prospect (Buller), Lyell gold prospect
(Lyell), and the Mt Radiant molybdenum prospect (Buller).
ENDS