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Phoenix Gold's Castle Hill Study Generates Strong Project Economics

Phoenix Gold (ASX: PXG) has completed a Conceptual Mining Study into the development of its wholly owned Castle Hill and Broads Dam Projects in Western Australia's goldfields that demonstrates a robust and highly profitable project.

Positive results from a five year mining plan include:

- Maximum gold production (yr 4) of 135,000 ounces;
- A capital cost of A$131 million;
- A cash operating cost (5 years, pre-royalties) of A$840 per ounce;
- Revenue over 5 years (1,600/oz) of A$915.9 million; and
- Net cash flow (before CAPEX, royalties and tax) of A$435.8 million.

The mining scheduled primarily focused on stage one and stage two of Castle Hill.

Several projects - Red Dam, Emu and Picante - located adjacent to Castle Hill, were included to enable efficient scheduling of the proposed mining fleet, however the remaining resources located outside the study's 15 kilometre radius were not included and remain as upside.

The recent deeper diamond drilling at Castle Hill was also not included in the study; therefore the potential resource increases below the current 85 metre depth were not included.

Jon Price, managing director, commented: "It is very pleasing to see the study demonstrating such strong economics given it does not include the recent deeper drilling results or several advanced projects that sit outside our 15 kilometre development radius.

"The CMS has identified the work we need to do to progress to a Definitive Feasibility Study in the next 12 months and make a decision to move ahead with construction.

"We will continue to grow our resources as fast as possible while we continue studies to determine optimal mining and processing routes for our core projects."

The Conceptual Mining Study also did not include the Catherwood Project, recently the subject of a right to mine agreement with Norton Gold Fields.

None of Phoenix's other projects on the Kunanalling and Zuleika shears, the recently discovered Telegraph project, the Carbine North project or any projects in the Ora Banda or Grants Patch areas form part of the initial study.

Plant design

The plant design is based on a nominal 1.65 million tonnes per annum (Mtpa) throughput utilising a three stage crushing circuit, a single stage grinding circuit (ball mill) followed by gravity and carbon in leach (NASDAQ:CIL) circuits.

In parallel with the mill a heap leach facility with a nominal 1.2Mtpa capacity is planned to treat the low grade material mined from the broad halo of lower grade mineralisation within the Castle Hill mine designs.

The crushing circuit has a nominal design throughput of 4Mtpa to cater for both the CIL circuit and heap leach.

Based on the extensive metallurgical and heap leach test work, including column, slumpage and crushability and IMO recommendations, the Conceptual Mining Study assumed metallurgical recoveries of 94% and 75% respectively for the milling and heap leach circuits.

Definitive Feasibility Study

Board approval has been granted to begin a Definitive Feasibility Study, which is expected to be completed in the December quarter of 2013.

Project development and construction is estimated to take between 16 and 18 months.

In the next nine months, Phoenix will also undertake further resource upgrades and optimisation studies.

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