Ausgold Limited (ACN 140 164 496)

Level 14, 191 St George’s Terrace Perth Western Australia 6000

T: +61 8 9424 9300 F: +61 8 9321 5932 info@ausgoldlimited.com www.ausgoldlimited.com

The Manager

ASX Company Announcements

PO Box H224, Australia Square

Sydney NSW 2001

20 September 2010

EXPLORATION UPDATE:

BODDINGTON SOUTH GOLD PROJECT AND DOOLGUNNA STATION PROJECT

Boddington South Gold Project

Over 100 kilometres of previously unmapped Archaean greenstones identified

241,800 ounce JORC-compliant gold resource

Current resource drilling limited to 30 metres from surface

High-grade (>8 g/t Au) gold mineralisation at depth

25 kilometre strike length of gold anomalism within project area

Copper mineralisation observed within deposit

Major drilling campaign commencing in October

Doolgunna Station Project

Detailed gravity survey of prospective Jenkins Fault commencing

Ausgold Limited (Ausgold or the Company) (ASX: AUC) is pleased to provide an update on the exploration

activities over its Boddington South and Doolgunna Station projects.

Boddington South Gold Project

Ausgold’s Boddington South Gold Project is located southwest of Perth and covers an area in excess of

5,500km2 (Figure 1).

This southwest region of the Yilgarn also hosts Australia’s largest gold deposit in Newmont’s 26 million ounce

Boddington Gold Mine, which is similarly the State’s largest copper deposit with 1.3 million tonnes of contained

copper.

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Despite hosting a world-class gold-copper deposit, the Archaean greenstones of the southwest Yilgarn have

previously experienced minimal exploration compared to the neighbouring Southern Cross and Eastern

Goldfields greenstone belts.

Ausgold recognises the potential of this region to host additional Boddington-style gold-copper ore bodies and

recently completed a comprehensive review of the Southwest Gneiss Terrain. The emphasis of this work was the

identification of similar geological settings as that associated with the Boddington Gold Mine; namely, Archaean

greenstone units that have undergone extensive faulting and, which are located near a regional northwest-

trending fault.

This review, completed with the assistance of Southern Geoscience Consultants, successfully identified in

excess of 100 kilometres of previously unmapped greenstones within the Company’s Boddington South Gold

Project area that display the desired geological characteristics (Figure1).

Significantly, the Armstrong Prospect in the northern part of Ausgold’s Boddington South Gold Project area

includes a 7 kilometre-long gold-in-soil and a separate 3 kilometre-long copper-in-soil geochemical anomalies

that partially overlap, and are associated with, the major northwest-trending structure of the Pingaring Fault

(Figure2).

The Hudson Prospect in the southern section of this project area, which is characterised by a 2 kilometre-long

gold-in-soil, 6 kilometre-long copper-in-soil and 9 kilometre-long arsenic-in-soil geochemical anomalies, is

similarly associated with a regional northwest-trending fault, being the Dumbleyung Fault (Figure 2).

Both the regional Pingaring and Dumbleyung Faults appear as equivalent and parallel structures as the regional

fault associated with Newmont’s Boddington Gold Mine.

The Hudson Prospect is also interpreted as the possible southern continuation of the Jinka’s Hill mineralisation,

which Ausgold recently acquired an 80% interest in via a Farm-In and Joint Venture Agreement (Farm-In) with

Great Southern Resources Pty Ltd (See Ausgold’s ASX Announcement dated 10 August 2010).

Following this Farm-In, the current JORC-resource of Ausgold’s Boddington South Gold Project stands at

241,800 ounces of gold (Table 1). However, the attractiveness of this recently acquired ground holding lies in its

enormous exploration and development potential.

The majority of the historic drilling within and around the five newly-acquired ore bodies terminates within the

oxide (weathered) material at depths of around 30 metres. Gold mineralisation within fresh rock, therefore,

remains largely untested. Consequently, these ore bodies exhibit considerable potential down dip and down

plunge in addition to remaining open to the north and south of the known mineralisation (Figure 3).

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The limited historic drilling that did extend beneath the current Jinka’s Hill Deposit returned very encouraging

intersections that includes 14m @ 5.59 g/t Au from 80 metres, 4m @ 7.54 g/t Au from 102m and 3m @ 16 g/t Au

from 154m.

Historic drilling of fresh bedrock below the current Dingo Hill Deposit similarly contains significant mineralisation

with intersections up to 45.3 g/t Au returned over a drill length of one metre being recorded.

Encouragingly, the well-defined structural orientations in both vein geometry and regional trends observed within

diamond drill core from within the Jinka’s Hill and Dingo Hill Deposits appears similar to Newmont’s Boddington

Gold Mine to the northwest.

Diamond drill core also indicates the existence of a high-grade ore (8 to 10 g/t Au) up to 10 metres thick in places

that increases in intensity down plunge of the Jinka’s Hill Deposit.

Beyond the presently known ore bodies with the Boddington South Gold Project, the Company’s review also

noted that gold anomalism has been recorded along a 25-kilometre strike length within immediate area

surrounding the Jinka’s Hill Deposit. Therefore, in addition to possible extensions of the known ore bodies the

Company considers there to be a significant possibility of discovering additional ore bodies within this section of

its Boddington South project.

Presently, 14 significant but under-explored gold anomalies have been identified along strike of the Jinka’s Hill

Deposit that warrant immediate follow-up exploration (Figure 4). These include:

Datatine Prospect (located 7 kilometres northwest of the Jinka’s Hill Deposit) that returned 4m @ 15.6

g/t Au from reverse circulation (RC) drilling,

Olympia Prospect (2 kilometres north of Jinka’s Hill Deposit) that intersected 2m @ 5.41 g/t Au from 37

metres in RC drilling,

Neighbours Prospect (1 kilometre north of Jinka’s Hill Deposit) where drilling intersected 3m @ 2.85 g/t

Au, and

Wurgabup Prospect (1 kilometre south of Jinka’s Hill Deposit) where shallow RC drilling interested 1m

@ 9.48 g/t Au, 4m @ 2.1 g/t Au and 6m @ 1.8 g/t Au.

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Furthermore, re-logging of the available diamond drill core by Ausgold’s geologists has identified the presence of

copper mineralisation (chalcopyrite) and the Company anticipates re-assaying this ore for gold and copper

mineralisation in the coming weeks (Figure 5).

Ausgold will commence its initial drilling program that tests the possible extensions of the five known gold

resources in October. This program represents the start of a major drilling campaign, which will be conducted

over the Boddington South Gold Project over the coming year.

The Company’s exploration strategy has four main objectives:

1. To test for depth and strike extensions to the Jinka’s Hill and Dingo Hill Deposits as both are open to the

north and south and exhibit considerable potential for gold mineralisation down dip and down plunge

2. To delineate additional gold resources along the 25 kilometre strike length within the area surrounding

the Jinka’s Hill Deposit where 14 gold anomalies have already been identified

3. To test large soil geochemical anomalies occurring across greater project area including at the

Armstrong and Hudson Prospects

4. To identify gold mineralisation within the previously unmapped and extensive greenstone units

The Company proposes to undertake an extensive exploration program over the coming year, which includes

more than 27,000 metres of air core and 24,000 metres of RC drilling over the following targets:

Deposit / Prospect # of RC holes # of RC metres # of air core holes # of air core metres

Jinkas Hill 35 3,500 - -

Dingo Hill 20 2,000 - -

Shoestring - - 100 5,500

Dingo South 25 2,500 - -

Rifle Range - - 35 2,000

Wurgabup 35 3,500 - -

White Dam - - 35 2,000

Lone Tree 40 4,000 - -

Perfect Partners - - 100 5,500

Neighbours 45 4,500 - -

Dyliabing 40 4,000 35 2,000

Coomelberrup - - 70 4,000

Datatine - - 70 4,000

Olympia - - 35 2,000

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Doolgunna Station Project

Ausgold’s Doolgunna Station Project is located adjacent to Sandfire Resources’ DeGrussa project area,

approximately 125 kilometres north of Meekatharra and is prospective for similar volcanogenic massive sulphide

(VMS) copper-gold mineralisation (Figure 6).

Sandfire Resources’ DeGrussa ore body is only a recent discovery and consequently Ausgold’s understanding of

the controls on mineralisation of this neighbouring copper-gold deposit is constantly evolving as more information

is made publically available by Sandfire Resources.

Ausgold’s recent shallow air core drilling program targeted a number of geophysical anomalies within the

Narracoota Volcanics. The final assays from this program have now been received. Whilst no significant values

were returned this initial drilling programme has refined and further developed our understanding of the structural

controls of the DeGrussa mineralisation. The Company’s focus has shifted from the Narracoota Volcanics to the

Jenkins Fault, which the Company now understands is an important control on DeGrussa-style copper-gold

mineralisation.

Ausgold’s Doolgunna Station Project cover over 5 kilometres of the Jenkins Fault. A detailed airborne

electromagnetic survey completed by Ausgold earlier in the year targeting VMS mineralisation mapped the

location of the Jenkins Fault within Ausgold’s project area as a pyrrhotitic (iron sulphide) sedimentary unit

coincident with the Jenkins Fault (Figure 7).

The presence of a strongly-conductive pyrrhotitic unit may mask more subtle electromagnetic responses of any

copper mineralisation. Ausgold has, therefore, commissioned a detailed ground gravity survey targeting the

Jenkins Fault, which is anticipated to commence in October.

Employment Options

In accordance with the Ceo's employment contract and subject to the necessary approvals Ben Bell will be

issued with a further 300,000 options exercisable 30 cents each and otherwise on the same terms as the existing

management options.

Shareholder or media contact:

Benjamin Bell

Chief Executive Officer

Ph: (08) 9424 9300

Email: bbell@ausgoldlimited.com The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Benjamin Bell, who is a Member of the Australian Institute of Geoscientists. Mr Bell is the Chief Executive Officer and a full-time employee of Ausgold Limited, and has sufficient experience 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”. Mr Bell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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Figure 1: Location of Ausgold Boddington South Gold Project (including tenements under application) superimposed over

interpreted Archaean greenstone units based on recent aeromagnetic interpretation for Ausgold

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Figure 2: Location of historic gold-in-soil, copper-in-oil and arsenic-in-soil geochemical anomalies within the Company’s

Boddington South Gold Project as identified by the Centre of Exploration Targeting and a recent in-house review of

publically available data

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Figure 3: Interpreted cross section of the Jinka’s Hill Deposit

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Figure 4: Locations of selected prospects along strike of the Jinka’s Hill ore body within Ausgold’s Boddington South Gold

Project’s mining leases

Figure 5: Chalcopyrite within quartz vein observed during Ausgold’s re-logging of historic Jinka’s Hill diamond drill core.

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Figure 6: Location of Ausgold’s Doolgunna Station Project

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Figure 7: VTEM airborne electromagnetic data acquired by Ausgold over the southeast corner of the Company’s Doolgunna

Station project. Image is Channel 25 of the B-field shaded from the north. The interpreted position of the Jenkins Fault is

superimposed over the VTEM data

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Tonnes Grade Ounces

JINKA’S HILL

Measured Resources (4.0 g/t cut off) 51,300 5.92 9,800

Indicated Resources (1.0 g/t cut off) 28,400 2.00 11,300

Inferred Resource 3,410,300 1.27 139,200

DINGO HILL

Indicated Resource (1.0 g/t cut off) 300,500 1.42 8,600

Inferred Resource 1,635,300 0.74 38,900

WHITE DAM

Inferred Resource 338,000 0.79 8,600

LONE TREE

Inferred Resource 555,000 0.79 14,100

DYLIABING

Inferred Resource 306,000 1.15 11,300

SUMMARY

Measured Resource 51,300 5.92 9,800

Indicated Resource 328,900 1.47 19,900

Inferred Resource 6,244,600 1.06 212,100

Total Resource 6,624,800 1.12 241,800

Table 1: Previously reported Defined Mineral Resources of the Boddington South Gold Project (See Ausgold’s ASX

Announcement dated 10 August 2010). Due to rounding, tonnages and grades may not equate to exact contained ounces