Continental Gold Announces an Updated Mineral Resource Estimate for the Buritica Project, Colombia

TORONTO, ONTARIO--(Marketwired - May 13, 2014) -

Editors note: There are four photos associated with this release.

Continental Gold Limited (TSX:CNL)(OTCQX:CGOOF) ("Continental" or the "Company") is pleased to announce an updated mineral resource estimate for the Yaraguá and Veta Sur vein systems at its 100%-owned Buriticá project in Antioquia, Colombia. Undertaken by independent consultants, Mining Associates Limited ("MA"), the mineral resource estimate is based on 202,982 metres of drilling and 3,735 metres of underground sampling (as at December 31, 2013) and was prepared in accordance with National Instrument 43-101 ("NI 43-101"). The Company continues with a major surface and underground drilling program to expand and increase the level of confidence of the mineral resources for the Yaraguá and Veta Sur vein systems and to explore new targets at the Buriticá project.

Highlights

• Combined mineral resources for the Yaraguá and Veta Sur vein systems at a 3 g/t gold cut-off grade are newly estimated as:

• The mineral resource estimate represents substantial increases in Measured, Indicated and Inferred resources of precious metals over those of the previous mineral resource estimate for the Buriticá project, announced by the Company on October 1, 2012. Gold resources in the Measured and Indicated category increased by approximately 70%, reflecting the Company's emphasis on infill drilling and sampling in 2013. Inferred gold resources grew by approximately 12%.
  
  
• Grade-Tonnage charts demonstrate the high-grade nature and robust character of the mineral resources over a range of cut-off grades from 0 to 5 g/t gold.
  
  
• Estimates of tonnage-grade per vertical-metre for the major vein domains demonstrate limited variation and substantial resources through elevation ranges of more than 600 metres.
  
  
• 65% of Yaraguá and 78% of Veta Sur gold resources are situated above 1,200 metres elevation, this elevation approximating the main access level for proposed development. Measured and Indicated resources are largely above this level and in addition, there is currently a focus to increase the confidence levels in other resources above and below the 1,200-metre elevation level.
  
  
• Significant potential remains for future mineral resource increases in the Yaraguá and Veta Sur vein systems, as most of the vein domains modeled in both Yaraguá and Veta Sur are open at depth and laterally. The current mineral resource estimate also excludes a number of veins in these systems for which there was limited drilling as of December 31, 2013.
  
  

"The quality of our new resource estimate is a continuing testament to the abilities of our technical teams in evaluating the high-grade nature and scale of the Buriticá system," commented Ari Sussman, CEO. "Although our precious metal resource estimate grew from the prior estimate, we are particularly pleased with the approximately 70% increase of our Measured and Indicated gold resource. Additionally, we look forward to further growth in all resource categories as underground drilling has just begun from the Higabra Valley tunnel, located at an elevation of 1,170 metres, which is below the elevation of much of this resource estimate. It is of particular importance for us to add Measured and Indicated resources around the 1,200-metre elevation and proximal elevations, as this potentially opens the door to mine plan scenarios with even greater throughput rates than currently being contemplated."

Details

Continental's 100%-owned, 59,095-hectare project, Buriticá, contains several known areas of high-grade gold and silver mineralization, of base metal carbonate-style ("Stage I") variably overprinted by texturally and chemically distinctive high-grade ("Stage II") mineralization. The two most extensively explored of these areas (the Yaraguá and Veta Sur systems) are central to this land package. The Yaraguá system has been drill-outlined along 1,100 metres of strike and 1,300 vertical metres and partially sampled in underground developments. The Veta Sur system has been drill-outlined along 1,100 metres of strike and 1,400 vertical metres. Both systems are characterized by multiple, steeply-dipping veins and broader, more disseminated mineralization and both remain open at depth and along strike. This press release outlines updated mineral resource estimates for the Yaraguá and Veta Sur systems, superseding the previous mineral resource estimate announced by the Company on October 1, 2012.

MA was commissioned to undertake mineral resource estimations for Yaraguá and Veta Sur. Mr. Andrew J. Vigar (B.Sc., FAusIMM, MSEG and MA Director) has been responsible for estimations largely undertaken by Mr. Martin Recklies (BAppSc. (Geoscience)), which will be detailed in a Technical Report prepared in accordance with NI 43-101 to be filed on SEDAR within 45 days of this press release. There was close collaboration between MA and the Buriticá site geologists and consultants, undertaken during site visits and at MA's Brisbane offices, in particular on the selection and tagging of the vein domains in the context of available underground and surface geology.

Resource modeling was based on Continental's Buriticá database as at December 31, 2013, audited and provided by Resource and Exploration Mapping Ltd. Database statistics are summarized below:

In view of their geology, grade distributions and potential mining methods, Yaraguá and Veta Sur were modeled as sets of sub-parallel, steeply-dipping vein domains (Figure 1). In the case of Yaraguá, 52 vein domains were interpreted from geological mapping and sampling of underground developments and drilling in the upper part of the system and extended to greater depth and along strike from drill intercepts.

The mineral resource estimate is constrained by domains consisting of 3D geological models. The drill- hole data (and underground channel samples where available) were displayed in section and elevation slices showing assays and geology. Intercepts were selected and coded for each vein domain based on the following selection criteria, in decreasing hierarchy:

1. Gold grades generally greater than 2 g/t Au and/or 100 g/t Ag;
2. No assays received, but a "vein" lithology code in the expected location; or
3. Sub-grade areas where the interpreted vein domain passed through the drill-hole but was not already coded (i.e. "brought through").

Vein domains were modeled using MA's proprietary software. For Veta Sur, 36 vein domains were interpreted from drilling; for Yaraguá, 52 vein domains. Intercepts were tagged by vein domain name and man iterations of 3D sections, plans and visualizations were done to ensure geometrically consistent vein domains. Other mineralization is present outside of these domains but requires further delineation drilling.

Informing samples were vein composites within domains, one composite sample across each vein intercept. The estimation grid size was 5 metres in X and Y with vein thicknesses (horizontal widths), and gold, silver and zinc grades estimated in unfolded space using Ordinary Krige estimation of their width and width x grade accumulations with grade back-calculated. This represented a change from the 2012 estimates and was used to remove localized grade spikes related to very high grade but thin intercepts. Considerable care was taken to ensure no bias was introduced, and the new method was tested against previous estimates. The informing sample grades were capped on a domain or sub-domain basis as determined by geostatistical analysis. A maximum of eight informing samples are used to estimate a block. As well as the tightly-constrained vein domains, high-grade and low-grade sub-domains were used within the vein domains, using a 2 metre*grams gold boundary with at least three samples within that boundary. Results of the Krige estimation were validated against raw data statistics. Trend analysis against the informing samples and check estimates using Inverse Distance Squared and Nearest Neighbour (Polygonal) estimation techniques are generally in good agreement with the Krige estimates and grade patterns, highlighting the importance of the sub-domaining in minimizing grade "smearing" where data density was low.

Results of the 2D estimation for each vein domain were combined to a normal 3D block model with sub-block size of 2.5 m (E) by 0.25 m (N) by 2.5 m (RL). The model was screened for topography and existing workings. The number of informing samples, presence of underground development or mining, clustering of data and distance to nearest informing sample were used by the QP to digitise contiguous areas defining resource categories in long-section using the following guidelines:

• Measured
  • A contiguous zone with at least 8 informing vein composites
  • Maximum of 8 informing vein composites used for each block estimate
  • Distance to the nearest informing sample is generally less than 10 metres but not more than 15 metres internally
• Indicated
  • A contiguous zone with at least 4 informing vein composites
  • Between 4 and 8 informing vein composites used for each block estimate
  • Distance to the nearest informing sample is generally less than 25 metres but not more than 40 metres internally
• Inferred
  • A contiguous zone with at least 3 informing vein composites
  • Generally between 3 and 8 informing vein composites used for each block estimate
  • Distance to the nearest informing sample is generally less than 100 metres
  • Some minor additional areas included at depth where geological continuity is good but drilling is sparse, must have at least one informing sample within 150 metres.
    

Areas within a vein domain already taken by development and/or historical mining have been removed and screened for topography. Volumetric estimates were converted to tonnage estimates utilizing an average specific gravity of 3.1, based on core measurements and computed from multi-element assay data.

Grade-Tonnage charts for 0 to 5 g/t gold cut-off grades are presented below (Figure 2) by mineral resource category for both the Yaraguá and Veta Sur vein systems. These are the capped Ordinary Krige estimates for vein domains, diluted to one-metre minimum horizontal widths with geostatistics-based grades for Veta Sur of 0.11 gold metre X grams ("Mgms"),1.82 silver Mgms and 478.5 zinc Mgms and for Yaraguá, 0.28 gold Mgms and 1.9 silver Mgms and 850 zinc Mgms.

These results demonstrate the high-grade nature and robust character of the Yaraguá and Veta Sur vein systems over a broad range of gold cut-off grades. The mineral resource tonnes tabled in Figure 2 are only within the tightly-constrained vein domains and thus do not reflect large quantities of undefined lower-grade (less than 3 g/t Au) material outside the currently-defined vein domains.

The results presented below (Tables 1, 2 and 3) are capped Krige estimates at 3 g/t gold cut-off grade and for one-metre minimum horizontal vein thicknesses. This gold cut-off grade reflects conceptual costs for underground development, mining and treatment.

Yaraguá Vein System

Additional to results reported in Table 1, Inferred resources of 0.09 Mozs gold and 1.1 Mozs silver (0.11 Mozs AuEq @ 3.3 g/t AuEq) and Measured and Indicated resources of 0.02 Mozs gold and 0.02 Mozs silver (0.02 Mozs AuEq @ 3.2 g/t AuEq) were estimated at above 3 g/t AuEq cut-off grade, but below 3 g/t gold cut-off grades.

These mineral resource estimates for the Yaraguá vein system are contained in 50 vein domains containing resources above 3 g/t gold cut-off grade over average strike extents of 480 metres and average depths extents of 680 metres (Figure 1) within more extensive vein envelopes, up to 1,120 metres strike length and 1,300 metre vertical extents. As well as vein extensions, additional vein domains were outlined to the north and south of the 2012 mineral resource envelope and additional veins were added in central and eastern Yaraguá. Most of the modeled veins are open at depth and along strike to the west. Vein domains average 1.3 metres horizontal width.

A significant proportion of, and the approximately 33% increase in the Measured and Indicated gold resources (relative to the 2012 mineral resource estimate) reflect the intensity of infill drilling in the vein system and some additional underground sampling of several of the major vein domains. Inferred gold resources increased by approximately 38%, as a result of step-out drilling. Although the Yaraguá vein systems were substantially extended in 2013, some areas of sparse drilling did not satisfy the criteria for Inferred resources, leaving substantial potential upsides for further drill testing.

A chart of tonnage and gold grade (calculated at 50 vertical metre intervals) versus elevation (1,200- metre range) for the Yaraguá mineral resource (above 3 g/t gold) is presented below (Figure 3).

Level slice tonnages decrease above RL's relative elevations ("RL's") of 1,500 metres due to a lack of drilling and due to various veins intersecting with the topographic surface. Tonnages decrease below 1,200 metres RL due to sparse drilling-data, resulting in limited modeling of the vein domains at depth. Tonnages and grades otherwise show limited variation over a 600-metre elevation range.

The table below to the tonnage-grade versus elevation chart (Figure 3) also shows tonnage (millions of tonnes) and gold resources (thousands of ounces) for each 50 vertical metre slice, also illustrating the substantial character of the Yaraguá resources over this 600-metre vertical range. It is noteworthy that those parts of the Yaraguá system so far drilled below elevations of 950 metres average more than 10 g/t gold grades.

65% of Yaraguá gold resources are above the 1,200-metre elevation and most of the Measured and Indicated gold resources are above this level. There remains significant scope for increasing the confidence levels of resources above and below the 1,200 metres elevation.

Veta Sur Vein System

Additional to figures reported in Table 2, Inferred resources of 0.06 Mozs gold and 3.7 Mozs silver (0.14 Mozs AuEq @ 3.9 g/t AuEq) and Measured and Indicated resources of 0.02 Mozs gold and 0.85 Mozs silver (0.04 Mozs AuEq @ 3.9 g/t AuEq) were estimated at above 3 g/t AuEq cut-off grade, but below 3 g/t gold cut-off grades.

These mineral resource estimates for the Veta Sur vein system are contained in 31 vein domains containing resources above 3 g/t gold cut-off grade over average strike extents of 410 metres and average depths extents of 740 metres (Figure 1) within more extensive vein envelopes, up to 1,040 metres strike length and 1,600-metre vertical extents. As well as substantial vein extensions to the southwest, additional vein domains were outlined to the south of the 2012 resource envelope. Most of the modeled veins are open at depth and along strike to the southwest. Vein domains average 1.3 metres horizontal width.

A significant proportion of, and the approximately 195% increase in the Measured and Indicated gold resources (relative to the 2012 mineral resource estimate) reflect the intensity of infill drilling in the central vein system. Inferred gold resources decreased by approximately 30%, reflecting the successful conversion of substantial portions of the 2012 resource envelopes to Measured and Indicated gold resources in 2013. Although the Veta Sur vein system was substantially extended in 2013, some areas of sparse drilling did not satisfy the criteria for Inferred resources, leaving substantial potential upside for further drill testing.

A chart of tonnage and gold grade (calculated at 50 vertical metre intervals) versus elevation (1,200-metre range) for the bulk of the Veta Sur resource (above 3 g/t gold) is presented below (Figure 4). Tonnages for level slices decrease at higher elevations, due to the intersection of certain veins with the topographic surface and also limited by drilling at shallow depths. Lower tonnages at lower elevations reflect limited deep drilling, but gold grades continue to be high-grade in these areas and attest to the potential of deep Veta Sur. The table below the tonnage-grade versus elevation chart (Figure 4) further illustrates the substantial nature of the Veta Sur resource over a 600-metre vertical extent.

The table below the tonnage-grade versus elevation chart (Figure 4) also shows tonnage (millions of tonnes) and gold resources (thousands of ounces) for each 50 vertical metre slice, also illustrating the substantial character of the Veta Sur resource over this 600-metre vertical range. The highest grade resources are currently between elevations of 1,500 to 1,700 metres. Otherwise the Veta Sur system drilled to date maintains similar gold grades over more than 1,000 metres of vertical extent.

78% of Veta Sur gold resources are above 1,200-metre elevations and all of Measured and Indicated gold resources are above this level. There remains significant scope for increasing the confidence levels of resources above and below 1,200-metre elevations.

Combined Yaraguá and Veta Sur Mineral Resources

Additional to the results in Table 3, Inferred resources of 0.16 Mozs gold and 4.7 Mozs silver (0.25 Mozs AuEq @ 3.6g/t AuEq) and Measured and Indicated resources of 0.04 Mozs gold and 0.96 Mozs silver (0.06Mozs AuEq @ 3.6 g/t AuEq) were estimated at above 3 g /t AuEq cut-off grade but below 3 g/t gold cut-off grades for the combined Yaraguá and Veta Sur systems.

The mineral resource estimates in Table 3 represent substantial increases in Measured, Indicated and Inferred resources of gold and silver over those of the previous mineral resource estimate for the Buriticá project announced by the Company on October 1, 2012, also at a 3 g/t gold cut-off grade. Gold resources in the Measured and Indicated category increased by approximately 70%, reflecting the Company's emphasis on infill drilling and sampling in 2013. Inferred gold resources grew by approximately 12%.

Grade-Tonnage charts demonstrate the high-grade nature and robust character of the mineral resources over a range of cut-off grades from 0 to 5 g/t gold.

Furthermore, estimates of tonnage-grade per vertical-metre for the major vein domains demonstrate limited variation and substantial resources through elevation ranges of more than 600 metres.

The bulk of Buriticá gold resources are situated above the 1,200-metre elevation, this elevation approximating the main access level for proposed development. Measured and Indicated resources are largely above this level and there is also the scope to increase the confidence levels in other resources above and below 1,200 metres elevation.

Significant potential remains for future mineral resource increases in the Yaraguá and Veta Sur vein systems, as most of the vein domains modeled in both Yaraguá and Veta Sur are open at depth and laterally. The current mineral resource estimates also exclude a number of veins in these systems for which there was limited drilling as of December 31, 2013 and also large areas where sparse drilling results did not satisfy the criteria for Inferred resources, leaving substantial potential upsides for further drill testing.

Dr. Vic Wall, Special Advisor to Continental, oversaw the resource modeling and noted, "The Mining Associates resource model for the Yaraguá and Veta Sur vein systems is well constrained geologically and conservative in its estimations. More recent drilling results are validating the resource models. The gold and silver resources in both systems are likely to grow substantially from infill and step-out drilling and resource confidence levels should increase with planned underground drilling. Exploration of other (to-date largely untested by drilling) targets will likely contribute to realizing additional precious metal potential of Continental's broader Buriticá project."

Technical Information

Vic Wall, PhD, special advisor to the Company and a qualified person for the purpose of NI 43-101, has prepared or supervised the preparation of, or approved, as applicable, the technical information contained in this press release. Dr. Wall is a geologist with 35 years' experience in the minerals mining, consulting, exploration and research industries. Following a career in Australian and North American academes, he held senior positions in a number of multinational major and junior minerals companies. A Fellow of the Australian Institute of Geoscientists, Dr. Wall is Principal of Vic Wall & Associates, a Brisbane-based consultancy that provides geoscientific services to mineral companies and government agencies worldwide.

The technical information in this press release relating to mineral resource estimates is based on technical information prepared under the direction and supervision of Andrew J. Vigar, a consultant geologist (FAusIMM, MSEG) holding a B.Sc (Applied Geology), with over 30 years' experience including specialist experience in resource evaluation and mining of gold deposits. Mr. Vigar, an independent QP (as defined in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves and NI 43-101,) has reviewed this press release and consented to the inclusion in this press release of extracts from, or a summary of, the technical information prepared under his direction and supervision.

For additional technical information on the Buriticá project, please refer to the technical report entitled "2012 Mineral Resource Estimate of the Buriticá Gold Project, Colombia" dated November 15, 2012 with an effective date of October 22, 2012, available on SEDAR at www.sedar.com, on the OTCQX^® at www.otcmarkets.com and on the Company website at www.continentalgold.com, which shall be superseded.

About Continental Gold

Continental Gold Ltd. is an advanced-stage exploration and development company with an extensive portfolio of 100%-owned gold projects in Colombia. Spearheaded by a team with over 40 years of exploration and mining experience in Colombia, the Company is focused on advancing its high-grade Buriticá gold project to production.

Additional details on the Buriticá project and the rest of Continental's suite of gold exploration properties are available at www.continentalgold.com.

Forward-Looking Statements

This press release contains or refers to forward-looking information under Canadian securities legislation, including statements regarding the estimation of mineral resources, exploration results, potential mineralization, and exploration and mine development plans, and is based on current expectations that involve a number of business risks and uncertainties. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to convert estimated mineral resources to reserves, capital and operating costs varying significantly from estimates, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Specific reference is made to the most Annual Information Form on file with Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements.

Differences in Reporting of Resource Estimates

This press release was prepared in accordance with Canadian standards, which differ in some respects from United States standards. In particular, and without limiting the generality of the foregoing, the terms "inferred mineral resources", "indicated mineral resources", "measured mineral resources" and "mineral resources" used or referenced in this press release are Canadian mining terms as defined in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves (the "CIM Standards"). The CIM Standards differ significantly from standards in the United States. While the terms "mineral resource", "measured mineral resources", "indicated mineral resources", and "inferred mineral resources" are recognized and required by Canadian regulations, they are not defined terms under standards in the United States. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. Readers are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into reserves. Readers are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, United States companies are only permitted to report mineralization that does not constitute "reserves" by standards in the United States as in place tonnage and grade without reference to unit measures. Accordingly, information regarding resources contained or referenced in this press release containing descriptions of our mineral deposits may not be comparable to similar information made public by United States companies.

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