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Phoenix Gold Delivers More Broad Gold Mineralisation At Castle Hill

Phoenix Gold (ASX: PXG) continues to discover gold at the evolving Castle Hill gold project, which is strategically located in the heart of the Western Australian Goldfields - less than 50 kilometres from Kalgoorlie.

Significant mineralisation has been intercepted in the first drilling program of Stage 2, with highlights including:

- 19 metres at 2.9g/t gold from 110 metres, including 14 metres at 3.4g/t gold;
- 13 metres at 2.1g/t gold from 40 metres, including 2 metres at 10.1g/t gold;
- 13 metres at 1.7g/t gold from 139 metres; and
- 13 metres at 1.5g/t gold from 157 metres.

Jon Price, managing director, commented on the latest discoveries: "These first drill results from Stage 2 have confirmed the work completed by previous owners and opened up a broad zone of mineralisation to the north.

"Castle Hill Stage 2 is shaping up to be the next significant mining area after Stage 1 and Red Dam and remains open in all directions and at depth."

The importance of the latest results is that they confirm mineralisation continues to the north and validates historic data, with the program targeting improved geological confidence in the existing resource - along with identifying the margins of the Kintore tonalite to the north.

The program was successful in providing a better understanding of the northern tonalite boundary, and shows that the mineralised system is broader than initially anticipated.

The Castle Hill Resource is currently 23.54 million tonnes at 1.6g/t gold for 1,178,000 ounces, with a resource upgrade expected to be delivered by the company in the March 2013 quarter.

Currently the company has a total resource of 2.5 million gold ounces, which impressively represents an increase of 324% since initial project acquisition in 2010 - and exceeds the interim target set early in 2012. The reserve is 559,000 gold ounces.

Phoenix is aiming to achieve an interim resource target of over 4 million gold ounces.

Red Dam

At Red Dam, drilling continues with two rigs operating on a continuous basis, with the first results expected in the next 2-3 weeks. Drilling will then re-commence at Castle Hill with one rig at Stage 1 and one rig at Stage 2.

Analysis

Today's results demonstrate the significant potential to grow the Castle Hill Stage 2 project both along strike and at depth, which would add to the existing resource of 1,178,000 gold ounces. An upgrade is expected in the March quarter 2013.

Strong news flow from Castle Hill will continue over the next year, with another 90,000 metres of drilling to be completed over this time.

These results confirm this project is growing into a significant new gold camp in the Goldfields region.

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