AUSGOLD LIMITED — Capital/Financing Update 2012

Dec 18, 2012

19 December 2012

ASX Announcement

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Maiden Mineral Resource Estimate

KEY HIGHLIGHTS

• Maiden Mineral Resource Estimate for Katanning Gold Project reported in accordance with the JORC Code. Utilising a 0.7 g/t cut-off grade the resource is estimated as follows:

	Tonnage (million tonnes)	Grade (g/t gold)	Contained Gold (ounces)
Measured Resource	1.08	1.47	51,000
Indicated Resource	4.28	1.27	175,000
Inferred Resource	5.0	1.1	177,000
TOTAL	10.4	1.21	403,000

• Resource estimated by Independent Consultants (MPR Geological)

• Details of estimation methods and data used as well as tabulation of the Mineral Resource at a variety of cut-offs are presented in the attached summary report

• At a 0.5g/t cut-off the global resource is 549,000 ounces of gold

• New Exploration targets recently announced

• Drilling to commence on new targets in January

Ausgold Limited (“ AUC ” or “the Company”) is pleased to announce the Maiden Mineral Resource Estimate (“MRE”) reported in accordance with the JORC Code for its Katanning Gold Project in SW Western Australia.

Utilising a cut-off grade of 0.7 g/t, the MRE has been estimated at 10.4 million tonnes averaging 1.21 g/t gold for a contained 403,000 ounces of gold. The Measured Resource is 1.08Mt at 1.47 g/t gold, the Indicated Resource is 4.28Mt @1.27 g/t gold and the Inferred Resource is 5Mt @ 1.1 g/t gold.

The Company’s CEO Dr Andrew Tunks commented:

“This Maiden Mineral Resource estimate is a milestone for Ausgold and the Katanning Gold Project. Based on these estimates we will now conduct metallurgical tests to confirm previous gold recoveries and then embark upon a Preliminary Economic Analysis to test various production scenarios. We also plan to continue with our exploration in the area with drilling on resource extensions and new targets commencing in January 2013.”

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Resource Estimate

The Company commissioned MPR Geological Consultants Pty Ltd (‘MPR’) to undertake the resource estimate.

The December 2012 MPR estimates at a variety of cut-off grades are presented below in Table 1.

Cut off	Measured	Indicated	Inferred	Total
Aug/t	Mt Aug/t	Mt Aug/t	Mt Aug/t	Mt Aug/t Au koz
0.3	2.56 0.89	13.1 0.72	26 0.6	41.7 0.66 878
0.4	2.03 1.03	9.54 0.86	16 0.7	27.6 0.78 691
0.5	1.64 1.17	7.22 0.99	10 0.8	18.9 0.90 549
0.6	1.33 1.32	5.54 1.13	7 1.0	13.9 1.08 483
0.7	1.08 1.47	4.28 1.27	5 1.1	10.4 1.21 403
0.8	0.90 1.61	3.37 1.41	4 1.2	8.3 1.33 354
0.9	0.75 1.76	2.71 1.55	3 1.3	6.5 1.46 303
1.0	0.64 1.91	2.22 1.68	2 1.5	4.9 1.64 256

Table 1: Katanning Gold Project gold resource estimates by cut-off grade

Data supplied by Ausgold to MPR comprised assays from over 1,500 drill holes (aircore, RC and diamond drilling) totalling over 130,000m of drilling, as well as wireframes of geological units, weathering and oxidation surfaces and information on density measurements performed by the Company. Resources were estimated by Multiple Indicator Kriging with block support correction. The methodology is explained in the attached summary report provided by MPR.

New Exploration Plan

Ausgold is committed to recommencing its exploration program early in 2013 and an 8,000m drilling program has been planned to commence in mid-January 2013. This drilling will be following on from previous drilling by Ausgold at Lukin, Dingo and Jackson as well as following up on historic results at Datatine where previous drilling had intercepted 5m @ 13.6g/t Au. New magnetic targets that were announced (ASX Release 27[th] Nov 2012) will also be tested in this program.

Katanning Gold Project, Western Australia - Background

The Company’s flagship project remains the Katanning Gold Project (‘KGP’), defined by a linear belt of geochemical anomalism that straddles a major (340° trending) deformation zone. Within this zone Ausgold has identified a series of major geochemical anomalies that define a prospective target over twenty kilometres along strike and remaining open to both the North and South.

The Company had conducted an extensive drilling program that tested mineralisation under the previous open pits (Jinkas and Dingo) as well as testing along strike and at depth. In November 2012 the Company announced results from newly acquired aeromagnetic and EM surveys which has indicated the presence of several coincident magnetic-EM targets, these targets along with follow up of previous aircore results from Datatine and Lukin will also be followed up with a new exploration drilling program in January 2013.

*ENDS***

For further information, shareholders and media please contact: Dr Andrew Tunks Victoria Thomas Chief Executive Officer Six Degrees Investor Relations Ph: (08) 9466 9555 Ph: (03) 9645 7567 Email: atunks@ausgoldlimited.com Email: victoria.thomas@sdir.com.au

Competent Persons Statement

The information in this report that relates to Mineral Resources is based on information compiled by Mr Jonathon Abbott of MPR Geological Consultants Pty Ltd. Mr Abbott is a Member of the Australian Institute of Geoscientists (‘AIG’) and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (The JORC Code). Mr Abbott consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration Results is based on information compiled by Mr Gary Brabham, who is a Member of the Australian Institute of Geoscientists and a Member of the Australasian Institute of Mining and Metallurgy. Mr Brabham is a full-time employee of Ausgold Limited, and has sufficient experience relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Brabham consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Forward Looking Statements

Statements regarding plans with respect to the Company’s mineral properties are forward looking statements. There can be no assurance that the Company’s plans for development of its mineral properties will proceed as anticipated. There can also be no assurance that the Company will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will be successfully developed at any of the Company’s mineral properties.

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Figure 1: Katanning Gold Project gold geochemical trend overlain on aerial photography. The area being explored is largely farmland. Very poor outcrop has contributed to the lack of historic exploration in the area.

ABN 98152948957 19/123A Colin St West Perth WA 6005 +61 8 9322 5367

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14[th] December 2012

Mr Gary Brabham Exploration Manager

Ausgold Limited 80 Churchill Avenue Subiaco, WA 6008

Dear Gary

RE: Resource estimation for the Katanning Gold Project

1. Introduction and Summary

MPR Geological Consultants Pty Ltd (MPR) has reviewed sampling data and estimated Mineral Resources for the Katanning Gold Project. This letter summarises key aspects of the current study. A comprehensive report including descriptions of the project background and details of the modelling and data reviews will completed shortly.

The Katanning Gold Project includes two deposit areas designated as Jinkas and Dingo. Mineralisation is hosted within a sequence of moderately east dipping medium to coarse grained mafic gneisses interlayered with barren monzogranite sills and cross cut by un-mineralised dolerite dykes.

The current estimates are based results from 1,516 aircore, RC and diamond holes drilled by Ausgold and previous explorers for a total of 130,468 metres of drilling.

Table 1 presents estimated Mineral Resources for a range of cut off grades. As stipulated by Ausgold these estimates are truncated at 150 metres below the pre-mining surface. The figures in Table 1 are rounded to reflect the precision of the estimates and include rounding errors.

Table 1: Katanning Gold Project Mineral Resource estimates December 2012

Cut off Au g/t	Measured Mt Au g/t	Indicated Mt Au g/t	Inferred Mt Au g/t	Total Mt Au g/t **Au koz **
0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0	2.56 0.89 2.03 1.03 1.64 1.17 1.33 1.32 1.08 1.47 0.90 1.61 0.75 1.76 0.64 1.91	13.1 0.72 9.54 0.86 7.22 0.99 5.54 1.13 4.28 1.27 3.37 1.41 2.71 1.55 2.22 1.68	26 0.6 16 0.7 10 0.8 7 1.0 5 1.1 4 1.2 3 1.3 2 1.5	41.7 0.66 878 27.6 0.78 691 18.9 0.90 549 13.9 1.08 483 10.4 1.21 403 8.3 1.33 354 6.5 1.46 303 4.9 1.64 256

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Katanning Gold Project December 2012

2. Available data

The current study is based on sampling data provided by Ausgold which includes 1,516 aircore, RC and diamond holes drilled by Ausgold and previous explorers since the early 1980’s for a total of 130,468 metres of drilling (Table 2).

Modifications to the supplied data were primarily limited to adjusting a small number of down-hole survey entries which showed unrealistic deviations and modifying the elevations of some older holes to match recent collar and topographic surveying.

Table 2: Summary of compiled drilling database

	Number of holes AC RC DDH **Total **	Metres AC RC DDH **Total **
Historic drilling Otter Exploration 1980-81 Gold Fields 1982-83 Associated Gold Fields 1985-86 GlengarryMiningNL 1987-90	- 98 7 105 - 20 24 44 - 227 - 227 - 284 - 284	- 2,707 229 2,936 - 1,177 1,898 3,075 - 6,352 - 6,352 - 7,684 - 7,684
Intermediate drilling International Mineral Resources 1996-99 Great Southern Resources 2001-05 IGC Resources 2006-08	76 139 - 215 - 28 - 28 - 49 3 52	1,976 6,596 - 8,572 - 2,867 - 2,867 - 5,334 504 5,838
Recent drilling Ausgold2010-11	- 638 13 651	- 92,797 3,217 96,014
**Total **	76 1,483 47 1,606	1,976 125,514 5,848 133,338

Figure 1 and Figure 2 show drill hole traces coloured by drilling phase relative to the existing pit crests and mineralised domains for Jinkas and Dingo respectively. For both deposits, sampling coverage of the mineralised domains varies from around 20 by 20 metres in central areas to considerably broader in peripheral areas and at depth.

The resource dataset is dominated by Ausgold RC and diamond drilling which represents 67% of the remnant mineralised domain resource composites. At around 16% and 17% respectively composites from the historic and intermediate sampling represent comparatively small portions of the dataset.

The estimates include densities of 1.8, 2.3 and 2.8 t/bcm for oxide, transition and fresh material respectively. These values were derived from the results of 367 immersion density measurements performed on samples of Ausgold diamond core.

Ausgold have not yet completed any metallurgical analyses for the Katanning project. Testwork by previous explorers suggests that the mineralisation is amenable to standard gravity and cyanide leach processing with gold recoveries of around 90%.

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Katanning Gold Project December 2012

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Figure 1: Jinkas drill hole traces relative to pit crest and mineralised domains at 350 mRL

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Figure 2: Dingo drill hole traces relative to pit crest and mineralised domains at 350 mRL

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Katanning Gold Project December 2012

3. Sampling and assaying

Ausgold’s RC holes were generally inclined at around 60[o] towards grid west approximately perpendicular to the moderately east dipping mineralisation. Samples were collected over one metre down-hole intervals with assay sub-samples collected by cyclone mounted cone splitters. The sub-samples were submitted to several commercial laboratories for analysis for gold by fire assay.

All of Ausgold’s drill holes have been geologically logged. The available geological logging defines the mineralisation controls and oxidation zones with sufficient accuracy for estimation of Mineral Resources.

Collar locations of Ausgold’s drill holes have been accurately surveyed by RTK GPS with down-hole surveying by single shot camera surveys and down-hole gyro surveys.

Information available to demonstrate the quality of Ausgold’s RC sampling includes recovered sample weights for estimation of sample recovery, qualitative moisture content logging and field duplicates. These data show that, although the sampling shows an increased proportion of wet, and low recovery intervals below approximately 100 metres down-hole, the sampling is of generally acceptable quality to form the basis of the current estimates.

Data available to demonstrate assay reliability for Ausgold’s sampling includes reference standards, blanks and inter-laboratory checks. These data confirm that the assaying is free of any material biases that would significantly affect confidence in the current estimates.

Ausgold compiled sampling data for the older drilling from a number of datasets with reference to hard-copy reports and sampling records where possible. MPR’s review of the supplied database included checking for consistency between and within the supplied datasets. The lack of significant inconsistencies noted by this review indicates that the database has been carefully compiled by Ausgold. The information available to MPR indicates that the sampling database is sufficiently reliable to form the basis of the current estimates.

No information was supplied to demonstrate the reliability of data from older, pre-Ausgold drilling. Closely spaced composites from Ausgold’s drilling and historic holes show comparable average gold grades. Although not definitive, this provides some confidence in the reliability of the older data.

4. Resource estimation

4.1. Mineralised domain interpretation

Mineralised domains used for the current study were interpreted by MPR on the basis of two metre down-hole composited gold grades with reference to interpreted geological wireframes supplied by Ausgold. Outlines capturing continuous zones of mineralisation with composite gold grades of greater than 0.1 g/t were digitised on sections aligned with drilling traverses and linked to form a set of closed triangulations. The mineralised domains dip at around 30[o] towards the east within the mafic gneisses and are trimmed by wireframes representing interpreted cross cutting dolerite dykes

Figure 1 and Figure 2 present plan-views of the mineralised domains relative to drill hole traces, and Figure 3 and Figure 4 show example cross sections of the resource domains relative to drill hole traces coloured by composited gold grades.

Eight separate mineralised domains have been interpreted for Jinkas. These domains have average true widths of around 30 metres and extend over a strike length of approximately 4.1 kilometres. They have been interpreted to around 350 metres depth which is well below the majority of drilling.

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Katanning Gold Project December 2012

Three mineralised domains have been interpreted for Dingo. The average true width of the individual domains is around 15 metres. They have been interpreted over a strike length of 1.1 kilometres to around 230 metres depth which is well below the majority of drilling.

The current estimates use surfaces representing the base of oxidation and top of fresh rock interpreted by Ausgold. For the combined deposits, the depth to base of oxidation averages around 14 metres and the depth to fresh rock averages approximately 38 metres.

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Figure 3: Jinkas drill hole traces and resource domains 18,960 mN

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Figure 4: Dingo drill hole traces and resource domains 14,190 mN

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Katanning Gold Project December 2012

4.2. Estimation methodology

Micromine software was used for data compilation, domain wire-framing, and coding of composite values. Exploratory data analysis, variogram calculation and modelling, and resource estimation were performed using GS3M software. The resulting models were imported into Micromine for resource reporting and visualisation.

The current estimates are based on two metre down-hole composited gold grades from aircore, RC and diamond sampling. For a comparatively small number of composites from below the mineralised domains with elevated gold grades of above 0.08 g/t, composite grades were reset to 0.05 g/t.

Resources were estimated by Multiple Indicator Kriging with resources estimated into 10 by 20 by 5 metre (east, west, elevation) panels. All class means were determined from bin mean grades with the exception of the upper bins of each domain, which were assigned from bin medians to reduce the impact of a small number of extreme grades.

The four progressively more relaxed search criteria used for estimation are presented in Table 3. For each deposit area the search ellipsoids were alligned with the dominant mneralisation orientation.

The estimates include a variance adjustment to give estimated resources for a medium scale open pit operation with mining selectivity of 4 by 6 by 2.5 metres and ore selection based on 5 by 8 by 1 metre grade control sampling.

Table 3: Search passes

Search Pass	Radii (x,y,z)	Minimum Data	Minimum Octants	Maximum Data
1 2 3 4	20,20,10 30,30,20 30,30,20 60,60,20	16 16 8 8	4 4 2 2	48 48 48 48

Panels estimated by search pass 1 and 2 were initially classified as Measured, Indicated and Inferred respectively and search pass 3 and 4 panels were classified as Inferred. All Measured panels from outside the main mineralised domains, and those below 90 metres vertical depth were reclassified to Indicated reflecting the greater uncertainty in these estimates.

Yours sincerely

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Jonathon Abbott

Consulting Geologist

MPR Geological Consulting Pty Ltd

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