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Phoenix Gold Drills 97.5 Grams Per Tonne Gold At Red Dam

Phoenix Gold (ASX: PXG) exploration success continues from its A$20 million accelerated drilling program in the highly prospective Kunanalling and Zuleika shear zones in the Western Australian Goldfields.

The maiden program at Red Dam has delivered some bonanza grade results such as; 6 metres at 97.5g/t gold from 256 metres.

Other highlights included; 7metres at 12.7g/t gold from 42metres; 3 metres at 17.3g/t gold from 42 metres; 12 metres at 4.0g/t gold from 42 metres; 3 metres at 14.8g/t gold from 134 metres; and 4 metres at 9.0g/t gold from 124 metres.

The results demonstrate that the geology is broader and more consistent than previously interpreted, and therefore there is significant potential for a high grade open cut and underground mine development.

An updated resource is expected to be delivered by Phoenix in the June quarter 2013, and these results highlight the potential to build tonnage and grade to the existing resource of 3.4 million tonnes at 2.1g/t gold for 229,000 ounces.

Jon Price, managing director, said that the latest results from the Red Dam project clearly demonstrate the potential of this recent discovery to be a significant contributor to the company's 8-10 year mine plan.

This plan is currently being developed as part of Phoenix's Definitive Feasibility Study which is due for completion in December this year.

Price added, "We have two core development assets in Castle Hill and Red Dam in a safe jurisdiction, close to major infrastructure and only a 30 minute drive from Kalgoorlie-Boulder.

"I am extremely encouraged by these latest exciting high grade gold intersections which further confirm that Phoenix is progressing into a significant new gold business in the goldfields region."

The drilling program

In January this year Phoenix commenced the phase 1 drilling program at the Red Dam project, with two rigs in operation undertaking 44 reverse circulation holes for over 6000 metres.

The drilling is targeting an extension to mineralisation both along strike and at depth outside the current resource envelope, while also validating historic drilling data and to infill areas to increase resources to the higher confidence Indicated category - for inclusion in the Definitive Feasibility Study.

Following the study a development decision including the construction of a stand-alone 2Mtpa processing plant is scheduled to occur.

Castle Hill drilling continues at speed

Drilling is continuing at the Castle Hill gold project, with both rigs at Stage 1 operating on a double shift to complete both extensional and infill programs, with a diamond rig to commence early next month.

Analysis

Today's results augur well for a resource upgrade at Red Dam in the June quarter 2013, which will help progress the company towards its target of 4 million ounces.

Phoenix currently has a Resource of over 2.5 million ounces, with a Reserve of 559,000 ounces.

The company is well-funded with $22 million in cash, and has an EV/Resource ounce of under under $20 - while at the same time is generating cash from ore agreements on smaller non-core stockpiles.

The key price catalysts are additional ounces, and the high grade results from Red Dam are set to increase ounces.

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