Carpathian increases the Open-Pit Measured and Indicated Resource by 200% on the RDM Gold Project, Brazil

(Toronto, Ontario – July 26, 2010) Carpathian Gold Inc. (CPN:TSX) (“the Corporation or Carpathian”) is pleased to announce an updated National Instrument (“NI”) 43-101 Resource Estimate, as provided by independent consultants NCL Brasil Ltda.  (“NCL”) on its 100% owned Riacho dos Machados (“RDM”) gold project located in Minas Gerais State, Brazil.  This Resource Estimate is an update to the initial NI 43-101 Resource Estimate previously announced on May 18, 2009 (the “2009 Resource Estimate”), and includes results from a total of 55,732 metres of drilling of which 24,269 metres was re-sampling of previous drill holes completed by Companhia Vale do Rio Doce (“Vale”). 

In early 2010, the Corporation completed its Phase II drill program of 20,526 metres that was designed to upgrade the inferred resource category to the measured and indicated categories over a broad mineralized zone within the open-pit portion of the deposit as defined in the Preliminary Economic Assessment (”PEA”) study released on August 12, 2009.  The open-pit portion of the updated measured and indicated categories of the mineral resource will be utilized for the reserve estimate in the nearly completed Feasibility Study.

The total open-pit plus underground updated Resource Estimate (the “2010 Resource Estimate”) includes 812,300 ounces of gold in the measured and indicated categories and 692,900 ounces of gold in the inferred category at a gold price of US$950/ounce as shown in the table below which summarizes the results of the 2010 Resource Estimate for both the open-pit and underground gold mineralization.

NI 43-101 Mineral Resource Estimate for RDM, July 2010

·         Base case cut-offs grades used in the mineral resource are 0.36 g/t Au for the open-pit and 1.09 g/t Au for the underground component of the mineralization. 

·         Open-pit resources are constrained within a pit shell utilizing appropriate mining and processing costs and US$950/oz gold (see parameters listed below).

·         Rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content.

A comparison between the 2010 Resource Estimate (open-pit and underground) and the 2009 Resource Estimate is shown below.

Note: See Press Release dated May 18, 2009 for further details on the 2009 Resource Estimate

Of the total 2010 Resource Estimate, 99.2% of the measured and indicated resource and 51.4% of the inferred resource is located within a Whittle pit shell.  The pit shell was obtained utilizing pit-optimizer software (Whittle Four-X) using appropriate mining and processing costs from the ongoing Feasibility Study, a US$950/ounce gold price and a 0.36 g/t Au cut-off grade.  Within this open-pit shell, the measured and indicated gold resource in the 2010 Resource Estimate has increased by 537,400 ounces, from 268,800 ounces to 806,200 ounces, a 200% increase compared to the 2009 Resource Estimate.  Below the open-pit shell and excluding a 15-metre crown pillar, a higher-grade cut-off was utilized (1.09 g/t Au), based on potential economic parameters along with engineering considerations, to define a resource with underground mining potential. 

Mr. Dino Titaro, President and CEO of the Corporation commented: “We are exceptionally pleased with this updated mineral resource estimate and the significant conversion of the initial 2009 open-pit inferred resource, which was utilized in the PEA study, into measured and indicated categories along with the increase of the overall total contained gold ounces in the project.  This is very significant for the project and speaks to the continuity of the gold mineralization and open-pit mineability which significantly de-risks project development.   In addition to the updated resource estimate and the strong conversion of inferred resources to measured and indicated, which has been a primary objective since the announcement of the PEA study in August of last year, we are near completion of the feasibility study that will incorporate the updated measured and indicated resource estimate.  Also, given our high conversion rate to measured and indicated further follow-up work, upon completion of the feasibility study, will target the remaining 355,900 ounces of inferred in-pit resources for conversion to measure and indicated which would add significantly to the mine-life.”

The gold mineralization at RDM is shear-zone hosted, within a package of Precambrian aged metamorphic rocks.  This shear zone strikes 20 degrees and dips 40 to 50 degrees east. Drilling has indicated that known gold mineralization is continuous over a strike length of 2,000 metres and is open along strike and at depth.  The 2010 Resource Estimate lies within a continuously mineralized gold zone of 2,000 metres in length that dips at 35 to 45 degrees to the southeast.  The open-pit portion of the resource extends from surface to a maximum vertical depth of approximately 300 metres. The gold-mineralized shear-zone can reach true-thicknesses of up to 35 metres, though a more typical thickness is 5 to15 metres at open-pit cut-off grades of 0.30 g/t Au.  In addition to this ‘main zone’, discrete ‘hanging-wall’ and ‘foot-wall’ gold mineral zones are modeled and are typically 2 to 5 metres true thickness.  The underground resource starts below the open-pit resource, taking into account a 15-metre crown pillar, and extends down 290 metres, and locally approximately 480 metres, below the pit.

Resource Growth Potential

The gold mineralization is situated within a continuous 14.0 kilometre long shear zone hosted in Precambrian metamorphic rocks with a demonstrated gold endowment.  This shear zone is fully covered by the Corporation’s mining concession and exploration licenses that extend over a continuous length of approximately 30 kilometres covering an area of approximately 22,000 ha.  The most intensely explored zone and location of the current 2010 Resource Estimate only represents approximately 2.0 kilometres of the southern portion of this shear zone.  There are numerous surface gold targets of similar gold grade that occur along strike within this shear zone and to date a total of seven (7) exploration targets have been outlined north of the open-pit resource area and one to the south.

The focus of the Corporation’s drill programs thus far has been on resource definition, however, in the Phase II drill program step-out drilling to the south extended the mineralization 280 metres south of the 2009 open-pit Resource Estimate and included the intersection from drill hole FRM-159 with returned 5.5 metres at 1.72 g/t gold.  North of the resource and along strike, drill hole FRM-122 intersected 3 metres (down hole length) at 1.27 g/t Au, approximately 850 metres north of the current 2010 Resource Estimate.  Further exploration drilling and evaluation is planned to extend the mineralization as well as test the other exploration targets along this highly prospective shear zone.

At the RDM deposit, the current open-pit 2010 Resource Estimate includes inferred resources of 355,900 ounces of gold.  This inferred resource will be further evaluated for resource category upgrade to extend mine-life and/or increase annual production.  The Phase II drilling program demonstrated that to date, the conversion rate of inferred to measured and indicated is well above 90%.

In addition to the strike extension targets and defined satellite exploration targets, the gold mineralization at RDM is also open at depth.  Once the open-pit is in production the Corporation plans to evaluate the underground resource as defined in the PEA study, which demonstrated a good probability of additional higher-grade ounces from an underground operation that could add to the overall operation both in terms of extending the mine life of the project and potentially increasing the annual production rate by an additional 50%.  Insufficient work has been completed at this time to allow for this potential underground resource to be included in the Feasibility Study. The grade of this underground mineralization is analogous to existing underground operating mines in Brazil, such as Yamana Gold’s Fazenda Brasileiro and Jacobina mines.

Feasibility Study Progress Update

Carpathian has retained an engineering and environmental consortium to complete the Feasibility Study that includes: Tecnomin Projetos e Consultoria Ltda, NCL Brasil Ltda, Golder Associates Brasil Consultoria e Projetos Ltda, and YKS Services Ltda.  Final engineering, costing and mining optimization studies are nearly completed. Completion of the Feasibility Study is expected in the coming weeks.

A matrix of cut-off versus grade-tonnages of the 2010 Resource Estimate is shown in tables at end of the press release and demonstrates the flexibility of applying various higher-grade cut-offs to optimize mill head grades.  As an example, utilizing a cut-off open-pit grade of 0.80 g/t Au, the present open-pit resource includes 726,200 ounces gold in the measured and indicated categories at 1.72 g/t Au and 328,700 ounces gold in the inferred category at 1.76 g/t Au which is greater than the open-pit resources considered in the PEA (all categories) of 806,700 ounces gold at 1.65 g/t Au.  Present mining studies are utilizing variable higher cut-off grades that are expected to meet management’s target of +100,000 ounces gold production per year.

Currently three diamond-core rigs are drilling for ore-definition purposes in order to convert inferred resource ‘pockets’ within the shallow portions of the open-pit as defined in the 2010  Resource Estimate to measured and indicated in order to be included in the Feasibility Study.  This will enhance the early-stage economics of the mine life.  This program is expected to be finished in the coming weeks.

Resource Estimate Parameters and Assumptions

To generate the 2010 Resource Estimate the following data and methods were used: 

·         Mineral resources were estimated in conformance with the CIM Mineral Resource and Mineral Reserve definitions referred to in National Instrument 43–101, Standards of Disclosure for Mineral Projects.

·         The Resource Estimate database includes 213 drill holes for a total of 31,463 metres completed by the Corporation (Phase I and Phase II completed from late 2008 to early 2010).  This drilling is predominantly diamond drill core, but does include 9,542 metres of Reverse Circulation drilling mainly as pre-collars for diamond drill holes.  In addition, and following validation, the Corporation re-sampled drill core from 149 drill holes completed by Vale, a previous property owner, which represents a total of 24,267 metres drilling.  In total the drill hole database includes 362 drill holes for 55,372 metres.  As part of the Phase II work program, the Corporation also completed 831 metres of trenching.

·         Sample preparation and gold assays were conducted by independent ISO Certified international laboratories. A thorough QA/QC program was in place during the drill program, which included the insertion of standards, duplicates and blanks at regular intervals totalling 17% of the submitted samples along with a check assay program from a secondary assay laboratory with 3% check assays.  A review of the QA/QC database showed adequate levels of quality for the Resource Estimate.

·         Densities were determined for a representative number of rock and mineralization types using industry standard methods. A total of 108 determinations exist in the database. The average value for each modeled alteration type was applied to the block model. 

·         Detailed geologic logging and sectional interpretations led to the development of 3D (three-dimensional) domain models of lithology and alteration types.  These geologic domains were utilized to constrain grade-shell solids with a nominal cut-off of 0.30 g/t Au for the open-pit and 1.00 g/t Au for the underground.  Geologic interpretation and modelling, 3D domain model building was carried-out by the Corporation’s exploration team and audited by NCL.  The grades shells typically form stacked elongated tabular bodies.  In the open-pit, a main mineralized solid is bracketed by a thinner footwall and hanging wall solids.  For the underground model, a single main-zone grade-shell solid was adopted with a localized hanging-wall zone of widths on the order of 1 to 8 metres, averaging 2.7 metres.

·         A geologic-model constrained block-model was generated using Gemcom software.  Analyses of gold grade distributions and variography studies were utilized for grade interpolation search parameters which used the Ordinary Kriging (“OK”) method.  Validation of OK through various methods is completed prior to finalizing.

·         A pit optimizer software (Whittle Four-X) was used to define the portions of the block model with reasonable prospects of being economical by using open-pit methods, as defined by the CIM code for mineral resources.  NCL adopted the following parameters for the Whittle:

o    Gold price of US$950 /oz

o    Mining operating cost: US$1.20/tonne

o    Plant operating cost including a CIL circuit: US$8.50 /tonne

o    G&A:  US$1.25/tonne ore

o    Gold recovery (for all mineralization types based on metallurgical test work completed by Carpathian) of 90%

o    For the open-pit, pit slope angles of 40°, 45° and 50° (oxide, mixed and fresh rock domains) were utilized

·         The underground model was examined to justify the portions of the block model that would support the necessary capital to develop them. The portions that were too isolated or with insufficient grade or tonnage for underground mining were categorized as waste.  For the underground model the following parameters were applied.

o    Gold price of US$950 /oz

o    Mining operating cost: US$20.00/tonne

o    Plant operating cost including a CIL circuit: US$8.50/tonne

o    G&A:  US$1.25/tonne ore

o    Gold recovery: of 90%

o    15% decline ramp costs: US$3,000/m

o    Level development: US$2,500/m

o    Raise bore costs: US$3,000/m

·         The resource classification for all models was based on the geologic model in context of gold-grade continuity and gold-grade variography studies to determine the parameters of a search ellipsoid. The requirement for indicated resources is two drill holes from within a search volume of 40 metre radius along plunge and 36 metre across plunge. Measured resources has half of this range, also requiring two drill holes and inferred resources are defined with a search volume of 100m x 75 m, without restriction of number of drill holes.

Mr. Rodrigo Mello, MAusIMM, Senior Geologist with NCL is the independent Qualified Person responsible for the Mineral Resource Estimate.   The complete NI 43-101 compliant Technical Report will be filed on SEDAR at www.SEDAR.com within 45 days.

Sample Protocol

Assay results are predominantly from a half-core split (sawn) NQ drill core and sampled on a metre by metre basis through the mineralized zone and into surrounding altered rock. In addition, Reverse Circulation (“RC”) drilling through the mineralized zone is sampled on a metre by metre basis and assayed only when dry samples are collected.  All samples collected from RDM are prepared and assayed at the independent ISO Certified SGS laboratory, located near Belo Horizonte, Brazil using industry standard fire assay techniques for gold on 50-gram sample charges with AAS finish. Coarse blanks, pulp blanks, pulp duplicates, and known gold standards are inserted on a routine basis. Combined, they consist of 17% per cent of submitted samples. In addition, on a periodic basis 3% of the crusher rejects are re-submitted and a minimum of 3% of the pulps will be analyzed at the ISO Certified ALS Chemex Laboratory near Belo Horizonte, Brazil for check assays.

Mr. Titaro, P.Geo., is the qualified person (as defined in NI 43-101) overseeing the design and implementation of the present exploration programs. He is responsible for preparing the technical information contained in this news release.

Carpathian Gold is an exploration and development company whose primary business interest is developing near-term gold production on its 100% owned Riacho dos Machados gold project in Brazil along with progressing its exploration and development plans on its 100% owned Rovina Valley Au-Cu project located in Romania.

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Forward-Looking Statements: This press release includes certain statements that may be deemed "forward-looking statements". Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “Project”, “intend”, “believe”, “anticipate”, “estimate”, and other similar words, or statements that certain events or conditions “may” or “will” occur. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward-looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those anticipated statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

RDM NI 43-101 Mineral Resources at Various Cut-off Grades, July 2010

Open-Pit Resource, within Whittle Four-X pit shell (utilizes economic parameters and gold price of US$950/ounce gold). 

Base-case cut-off grade is shaded.

Notes: 1) Rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. 2) the resource is combined of oxide, transitional and sulfide material.

Underground Resource beneath the Open-Pit Shell (US$950/ounce gold). 

Base-case cut-off grade is shaded.

Notes: 1) Rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. 2) all resource is sulfide material.