Lachlan Star Limited — Capital/Financing Update 2012

Apr 30, 2012

==> picture [196 x 71] intentionally omitted <==

LACHLAN
STAR
LIMITED Operations Update 1 May 2012

LACHLAN
STAR
ANNOUNCES
RECORD
GOLD
OUNCES
STACKED
IN
APRIL
SINCE TAKING
OWNERSHIP,
DECISION
TO
MOVE
TO
OWNER
MINING
AND
DRILL RESULTS
FROM
ITS
CMD
GOLD
MINE
INCLUDING
99M
GRADING
1.47
G/T
AU

**NOT

FOR
DISTRIBUTION
TO
UNITED
STATES
NEWSWIRE
SERVICES
OR
FOR
RELEASE,
PUBLICATION,
DISTRIBUTION
OR DISSEMINATION
DIRECTLY,
OR
INDIRECTLY,
IN
WHOLE
OR
IN
PART,
IN
OR
INTO
THE
UNITED
STATES**

Perth,
Western
Australia:
Gold
miner,
Lachlan
Star
Limited
(“Lachlan”
or
the
“Company”)
(ASX
and
TSX:
LSA) is pleased
to
announce
an
operations
update
for
April,
owner
mining
guidance
and
further
drill
results
from
its
100% owned
CMD
Gold
Mine
in
Chile.

Highlights
include:

**Gold

Stacked
During
April**

• Ø Gold
  stacked
  of
  6,000
  ounces
  in
  April,
  a
  record
  under
  Lachlan
  Star
  ownership

• Ø Ore
  mining
  resumed
  at
  both
  the
  Chisperos
  and
  Las
  Loas
  pits
  in
  the
  last
  week
  of
  April

• Ø Average
  ore
  grade
  for
  April
  increased
  to
  0.61g/t
  Au

**Mining

Strategy**

• Ø Evaluation
  of
  mining
  options
  results
  in
  Lachlan
  Star
  selecting
  owner
  mining
  as
  preferred
  mining
  method going
  forward

• Ø Conditional
  purchase
  order
  placed
  for
  new
  100t
  truck
  fleet
  and
  associated
  equipment

• Ø Expected
  mining
  costs
  in
  the
  range
  of
  US$1.70-­‐$1.80/t
  moved,
  a
  substantial
  saving
  over
  current
  costs

• Ø Reduction
  in
  mining
  contractors
  from
  three
  to
  one
  completed
  to
  reduce
  unit
  rates
  from
  May
  onwards

• Ø New
  mining
  strategy
  expected
  to
  deliver
  cash
  cost
  savings
  of
  US$100-­‐US$150
  per
  ounce

**Tres

Perlas
Deposit
Drill
Results**

• Ø 16m
  grading
  0.65
  g/t
  Au
  from
  30m
  downhole
  and
  99m
  grading
  1.47
  g/t
  from
  190m
  downhole
  in
  RCH 2012-­‐52

• Ø 62m
  grading
  0.94
  g/t
  Au
  from
  228m
  downhole
  in
  RCH
  2012-­‐60

• Ø Sampling
  of
  El
  Sauce
  waste
  dump
  return
  encouraging
  results
  including:

• Ø 30m
  grading
  0.26
  g/t
  Au
  from
  10m
  downhole
  in
  RCH
  2012-­‐60

• Ø 20m
  grading
  0.19
  g/t
  Au
  from
  0m
  downhole
  in
  RCH
  2012-­‐56

**CMD

GOLD
MINE
(100%
CHILE)**

**Mining

and
Gold
Stacked**

The
Company
wishes
to
advise
that
6,000
ounces
of
gold
were
stacked
for
the
month
of
April.

This
is
a
record since
Lachlan
Star
took
ownership
of
the
operation
and
was
achieved
despite
the
Company
not
mining
for
most
of the
month
in
the
Chisperos
and
Las
Loas
pits
(refer
to
March
quarterly
report
lodged
today).
The
result
follows
on from
the
month
of
March
were
ounces
stacked
were
down
on
budget
(to
3956
ounces)
as
a
result
of
the operational
issues
around
the
Chisperos
power
line.

Ore
was
predominately
sourced
from
the
Toro
pits
during
April,
with
additional
ore
from
the
Tres
Perlas
and Churrumata
pits.
Mining
at
the
Chisperos
and
Las
Loas
pits
recommenced
in
the
last
week
of
April.
The
average stacked
ore
grade
for
April
increased
to
0.61
g/t
Au,
which
is
the
highest
stacked
grade
since
October
2011
for
the operation.

**Mining

Strategy**

The
Company
has
carried
out
a
detailed
review
of
the
best
method
to
optimise
mining
costs
and
to
further
support the
expansion
of
the
CMD
Gold
Mine
and
determined
that:

• Ø The
  optimal
  way
  forward
  is
  to
  convert
  a
  portion
  of
  the
  mining
  operations
  to
  owner
  mining

• Ø The
  mining
  contractors
  on
  site
  be
  rationalised
  from
  three
  to
  one
  contractor
  which
  will
  deliver
  an immediate
  saving
  on
  mining
  unit
  rates

The
new
mining
strategy
is
expected
to
deliver
cash
cost
savings
of
US$100-­‐US$150
per
ounce.

**Owner

Mining**

The
increased
Tres
Perlas
mineral
resource
base
underpins
the
Company’s
decision
to
move
to
owner
mining
for the
fleet
to
be
used
at
this
pit.
After
negotiations
with
several
fleet
suppliers,
a
conditional
purchase
order
has been
placed
with
Komatsu
Chile
to
secure
a
100t
truck
fleet
and
associated
equipment.
Delivery
is
expected towards
the
end
of
calendar
2012.

Based
on
the
review
of
maintenance,
fuel
and
operator
costs,
the
expected
operating
cost
for
owner
mining
is
in the
range
of
US$1.70
to
US$1.80/t
moved.
This
compares
to
the
March
quarterly
mining
costs
of
US$2.39/t
moved by
contractors
with
small
fleet.

The
Company
already
conducts
some
of
the
drill
and
blast
and
ore
rehandle
operations
at
the
CMD
Gold
Mine
and this
move
is
an
extension
of
the
same
strategy.
It
is
planned
to
increase
management
capacity
prior
to
delivery
of the
mine
fleet
to
ensure
maximum
positive
impact
from
the
commencement
of
owner
mining.

**Mining

Contractors**

The
mining
contractors
on
site
have
been
rationalised
from
three
to
one
contractor,
which
will
deliver
an immediate
saving
on
mining
unit
rates.
The
two
contractors
who
have
finished
were
on
short
term
contracts
that incorporated
relatively
high
unit
rates
as
a
result
of
the
short
term
duration
of
these
contracts.
These
contractors had
their
previous
contracts
extended
whilst
the
third
contractor
became
established
and
reduced
any
changeover risk
to
total
movement
rates.
The
remaining
contractor
has
approximately
18
months
to
run
on
its
contract
and will
continue
to
be
utilised
in
the
smaller
pits
where
their
smaller
truck
fleet
is
more
suited.

2

Exploration

Drilling
is
ongoing
at
the
Tres
Perlas
deposit
and
the
overlying
El
Sauce
waste
dump.
A
complete
list
of
drill
results for
the
quarter
is
contained
in
Table
1
at
the
end
of
this
report.

Significant
drill
results
for
April
include:

• Ø 16m
  grading
  0.65
  g/t
  Au
  from
  30m
  downhole
  and
  99m
  grading
  1.47
  g/t
  from
  190m
  downhole
  in
  RCH 2012-­‐52

• Ø 62m
  grading
  0.94
  g/t
  Au
  from
  228m
  downhole
  in
  RCH
  2012-­‐60

• Ø Sampling
  of
  El
  Sauce
  waste
  dump
  return
  encouraging
  results
  including:

• Ø 30m
  grading
  0.26
  g/t
  Au
  from
  10m
  downhole
  in
  RCH
  2012-­‐60

20m
grading
0.19
g/t
Au
from
0m
downhole
in
RCH
2012-­‐56

The
result
of
99m
grading
1.47
g/t
Au
in
RCH
2012-­‐52
continues
to
demonstrate
the
higher
grade
nature
of
the
El Sauce
area
(refer
Figure
1).

FIGURE
1
–
Cross
Section
3950m
N

==> picture [484 x 284] intentionally omitted <==

The
result
of
62m
grading
0.94
g/t
Au
in
RCH
2012-­‐60
confirms
the
down
dip
extension
of
the
mineralisation
seen in
RCH
2012-­‐46
(94m
grading
0.96
g/t
Au
and
22m
grading
1.98g/t
Au).
Sampling
of
the
El
Sauce
waste
dump
is now
also
being
carried
out
and
has
returned
interesting
results
including
the
30m
grading
0.26
g/t
Au
at
the
top
of RCH
2012-­‐60,
20m
grading
0.19
g/t
Au
from
surface
in
RCH
2012-­‐56,
and
5m
grading
0.20
g/t
Au
and
15m
grading 0.18
g/t
Au
at
the
top
of
RCH
2012-­‐52.

3

FIGURE
2
–
Cross
Section
3840m
N

==> picture [516 x 440] intentionally omitted <==

As
can
be
seen
in
the
long
section
in
Figure
3,
the
result
in
RCH
2012-­‐60
continues
to
fill
in
the
gap
in
the
mineral resources
between
the
El
Sauce
area
and
the
Tres
Perlas
pit.
This
result
further
confirms
the
mineralisation
seen
in previously
reported
holes
RCH
2012-­‐30,
33
and
42.
Drilling
continues
in
this
area
with
the
goal
of
pattern
drilling the
gap
to
underpin
a
systematic
mineral
resource
estimate
along
the
full
strike
length
of
the
Tres
Perlas
deposit.

4

FIGURE
3
–
Long
Section
8275m
E

==> picture [511 x 317] intentionally omitted <==

The
results
from
the
waste
sampling
are
encouraging
as
current
mine
planning
assumes
that
this
material
(which
is at
surface
and
does
not
require
blasting)
is
barren.
Further
sampling
of
this
waste
dump
is
ongoing,
both
through drilling
and
bulk
sampling,
with
a
view
to
establishing
an
accurate
grade
for
the
material.

For
and
on
behalf
of
the
Board

==> picture [163 x 57] intentionally omitted <==

Mick
McMullen

Chairman

For
further
information
please
visit
www.lachlanstar.com.au or
contact

Mick
McMullen Declan
Franzmann Chairman Managing
Director Lachlan
Star Lachlan
Star Tel:
+61(0)8
9481
0051 Tel:
+61(0)8
9481
0051 Email:
mick.mcmullen@lachlanstar.com.au Email:
declan.franzmann @lachlanstar.com.au

5

Table
1
–
Drill
Results

Hole ID	Grid_N	Grid_E	Grid_Elev	Azimuth	Dip	From	To	Interval	g/t Au	Cu
DDH-2012-047	2460.5	6726.6	1095.6	50.3	-60.8	49	51	2	0.34
						70	89	19	0.25
						131.4	139	7.6	1.07
						153	158	5	0.21
						178	188	10	0.32
						201	208	7	0.33
DDH-2012-048	2523.4	6668.2	1098.3	65.0	-60.0	50.1	50.6	0.5	0.19
						52.1	53.5	1.4	0.28
						55	59	4	0.31
						103	109	6	0.37
						115	117	2	0.20
						167.4	167.9	0.5	0.45	0.70
						194.5	195.5	1		0.18
						200.1	202.1	2	0.28
						204	205	1	0.63
						209	211	2	0.62
						219	220	1		0.21
						221	222	1	0.27
RCH-2012-050	4100.0	8150.0	1092	0.0	-90.0	119	120	1	0.22
						123	124	1	2.37
						231	232	1		0.19
						243	244	1		0.21
RCH-2012-052	3962.2	8196.4	1099.8	77.1	-89.6	9	15	6	0.20
						30	46	16	0.65
						59	61	2	0.33
						63	73	10	0.38
						82	87	5	0.33
						92	95	3	0.43
						130	133	3	0.44
						190	229	39	1.27
						192	197	5		0.79
						236	256	20	2.23
						258	283	25	1.98
						286	289	3	0.41
RCH-2012-054	4060.0	8100.0	1105	0.0	-90.0	39	39	0	0.34
						83	85	2	0.47
RCH-2012-055	4060.0	8200.0	1105	0.0	-90.0	30	40	10	0.26
						90	93	3	0.30
						230	235	5	0.39

6

Hole ID	Grid_N	Grid_E	Grid_Elev	Azimuth	Dip	From	To	Interval	g/t Au	Cu
RCH-2012-056	4059.9	8149.9	1104.9	203.9	-88.6	0	20	20	0.19
						46	51	5	0.29
						83	85	2	0.26
						135	140	5	0.17
RCH-2012-057	4091.3	8197.7	1106.0	347.8	-89.6	5	10	5	0.15
						10	15	5	0.37
						39	40	1	0.25
						49	52	3	0.24
						262	264	2	0.34
RCH-2012-058	4004.4	8162.5	1099.8	153.4	-89.9	50	55	5	1.04
						25	40	15		0.18
						67	78	11	0.75
						83	86	3	0.15
						94	96	2	0.34
						104	108	4	1.27
						179	181	2	0.30
RCH-2012-060	3843.2	8247.0	1083.5	272.5	-89.5	10	40	30	0.26
						40	97	57	0.31
						103	112	9	0.31
						124	143	19	0.43
						184	202	18	0.21
						228	290	62	0.95

_**Competent

Persons
Statement**_

The
information
in
the
news
release
that
relates
to
the
Mineral
Resources
of
Tres
Perlas,
Chisperos,
Las
Loas,
El
Sauce,
Churrumata
and
Toro/Socorro
is based
on
information
compiled
by
David
Slater,
who
is
a
Chartered
Professional
Member
of
The
Australasian
Institute
of
Mining
and
Metallurgy.
Mr.
Slater is
employed
full
time
by
Coffey
Mining
Pty
Ltd.
The
information
in
the
news
release
that
relates
to
exploration
results
is
based
on
information
approved
by Declan
Franzmann,
who
is
a
Chartered
Professional
Member
of
The
Australasian
Institute
of
Mining
and
Metallurgy.
Mr.
Franzmann
is
employed
by
Citraen Pty
Ltd
and
is
an
officer
of
the
Company.
Each
of
Mr.
Slater
and
Mr.
Franzmann
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
Mineral
Resources
and
Ore
Reserves”
and
to
qualify
as
a
“Qualified
Person”
under
NI
43-­‐101.
Each
of
Mr.
Slater
and Mr.
Franzmann
consents
to
the
inclusion
in
the
news
release
of
the
matters
based
on
his
information
in
the
form
and
context
in
which
it
appears.

_**Caution

Regarding
Forward
Looking
Information:**_

This
report
contains
forward-­‐looking
information,
which
is
based
on
assumptions
and
judgments
of
management
regarding
future
events
and results.
Such
forward-­‐looking
information
includes
but
is
not
limited
to
information
with
respect
to
future
exploration
and
drilling,
procurement
of financing
and
procurement
of
necessary
regulatory
approvals.

Forward-­‐looking
information
involves
known
and
unknown
risks,
uncertainties,
and
other
factors
which
may
cause
the
actual
results,
performance or
achievements
of
the
Company
to
be
materially
different
from
any
anticipated
future
results,
performance
or
achievements
expressed
or
implied by
such
forward-­‐looking
information.
Such
factors
include,
among
others,
the
actual
market
price
of
gold,
the
actual
results
of
current
exploration, the
actual
results
of
future
exploration,
changes
in
project
parameters
as
plans
continue
to
be
evaluated,
as
well
as
those
factors
disclosed
in
the Company's
publicly
filed
documents.
The
Company
believes
that
the
assumptions
and
expectations
reflected
in
the
forward-­‐looking
information
are reasonable.
Assumptions
have
been
made
regarding,
among
other
things,
the
Company’s
ability
to
carry
on
its
exploration
and
development activities,
the
timely
receipt
of
required
approvals,
the
price
of
gold,
the
ability
of
the
Company
to
operate
in
a
safe,
efficient
and
effective
manner and
the
ability
of
the
Company
to
obtain
financing
as
and
when
required
and
on
reasonable
terms.
Readers
should
not
place
undue
reliance
on forward-­‐looking
information.
Lachlan
Star
does
not
undertake
to
update
any
forward-­‐looking
information,
except
in
accordance
with
applicable securities
laws.

7