Phoenix Gold's (ASX:PXG) extension drilling has delivered high-grade gold at Castle Hill Stage 3, which is part of the Castle Hill gold camp in an infrastructure rich region 50 kilometres from Kalgoorlie.
The drilling has been completed outside of the current resource envelope, and therefore will add to future resource calculations, with an update expected in the December quarter 2014.
Highlights included: 4 metres at 32.5g/t gold from 80 metres; and 1 metre at 80.0g/t gold from 74 metres.
These high-grade hits were supported by broader intersections including: 11 metres at 5.8g/t gold from 48 metres; 14 metres at 3.0g/t gold from 8 metres; and 16 metres at 2.2g/t gold from 26 metres.
Adding further to the potential of Castle Hill Stage 3, it now covers a 3 kilometre strike to the north of Stage 1 at Castle Hill, which remains open in all directions.
The news will continue for Phoenix, with more drill results from Burgundy and Red Dam expected in October.
Jon Price, managing director, commented: "Castle Hill has always presented as a multi-stage gold camp and these latest results from Stage 3 again demonstrate the growth potential of this large system, which remains open in all directions.
Drilling program at Castle Hill Stage 3
In total 41 reverse circulation holes covering over 6000 metres have been completed at Castle Hill Stage 3 up until the end of June 2014.
The area is immediately north of the Castle Hill Stage 1 gold project.
Castle Hill Stage 1 & 2: license to mine with Norton Gold Fields
Castle Hill Stage 1, now the Mick Adams gold project, is being developed under the license to mine with Norton Gold Fields and the execution of the formal agreement is expected in the December quarter.
This will deliver 50% of the cash flow surplus to Phoenix with no capital outlay. Mining is expected to commence in the March quarter 2015.
Castle Hill Stage 2, now the Kintore gold project, is under development with mining commencing in early Sept and first milling and gold production planned for early October.
This mine will be followed by the Burgundy, Red Dam and Nazzaris projects delivering 700,000 tonnes per annum of ore grading 2.2g/t gold to the Greenfields Mill for toll treatment over the next 2 years under Phoenix management.
Price added, "As mining at Kintore West continues, the license to mine agreement is being finalised with Norton Gold Fieldsover the Mick Adams and Wadi projects and the updated heap leach feasibility is being completed, Phoenix remains committed to growing Resources and replacing Reserves from targets generated within our existing portfolio."
Lower grade ore mined and stockpiled
In other PXG news, the lower grade ore mined and stockpiled is currently the subject of an updated heap leach feasibility study after Phoenix purchased a stand-alone 2.3Mtpa heap leach facility from Gold Fields Ltd St Ives for $2 million.
This study will be completed in the Dec quarter 2014 after additional met testing, updated capex and opex and financial modeling.
Initial modeling demonstrates a production profile of 20-25koz per annum at very low unit costs given the mining costs are sunk.
Analysis
Identifying a number of new extensions over a 3 kilometre strike to the north of Stage 1 at Castle Hill is positive for an upgraded resource expected to be completed in the December quarter 2014.
Near-term newsflow includes more drill results from Burgundy and Red Dam expected in October, as well as the updated JORC resource.
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