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Millennium Minerals Hits Gold Grading Up To 32g/T At Nullagine Project

Millennium Minerals (ASX:MOY) has hit significant gold grading up to 32g/t from drilling the Au81 and Golden Eagle deposits, just 2 kilometres from the Golden Eagle processing facility in the East Pilbara owned by Millennium.

Nullagine already has a 1.30 million ounce gold Mineral Resource and 712,800 ounce Ore Reserve contained within 7 deposits on granted mining leases. Today's drill results have the potential to form the next deposit at the project and increase resources.

Brian Rear, Milennium's chief executive officer, told Proactive Investors the results were part of the company's "within the headframe" strategy of developing resources on or near its existing deposits.

The results were from 2013 RC drilling at Nullagine Gold Project, where a combined total of 51 Reverse Circulation holes for 5,060 metres were recently completed at the Au81 prospect and Golden Eagle deposit.

Today's results included 22 metres at 12.0 g/t gold from 14 metres, including 5 metres at 32g/t Au from 21 metres in hole ARC0189 (Au81).

This wasn't alone as other intercepts were also impressive:

- 37m at 6.15 g/t Au from 17m, including 7m at 12g/t Au from 18m in hole ARC0186 (Au81)
- 16m at 4.91 g/t Au from 22m, including 2m at 17g/t Au from 31m in hole ARC0187 (Au81)

The AU81 prospect is located 2 kilometres to the east of the fully operational 1.5 Mt per annum CIL gold processing facility at Golden Eagle.

The results demonstrate good potential to form an economic deposit with further drilling.

Golden Eagle drill results

Best gold intercepts include:
- 10m at 2.40 g/t Au from 116m in hole GEX159 (Golden Eagle);
- 8m at 2.53 g/t Au from 129m in hole GEX159 (Golden Eagle);
- 9m at 2.48 g/t Au from 93m in hole GEX134 (Golden Eagle);

Results in more detail

At Au81, the results confirm the Main Zone high grade shoot, with core gold grades of half to one ounce per tonne. The results validate historical intersections, confirm dips and & highlight grades.

New intersections prove continuity of Golden Eagle deposit footwall & main zone mineralisation at depth and show upside potential to expanded Resources & Reserves.

AU81 PROSPECT

The purchase of the Au81 prospect and granted Mining Lease M46/138 was announced in May 2012.

Although significant historical drilling is present, no previous JORC compliant Resource or Reserve estimates have been completed due to the lack of QAQC & density data and the late 80's age of the previous drilling data. There was also some uncertainty in the positional accuracy of the previous holes.

Key objectives of the recent drilling were to test and confirm the lower confidence historical drilling, and to establish the potential for JORC compliant Resource and Reserve estimates.

Although significant historical drilling is present, no previous JORC compliant Resource or Reserve estimates have been completed due to the lack of QAQC & density data and the late 80's age of the previous drilling data. There was also some uncertainty in the positional accuracy of the previous holes.

Key objectives of the recent drilling were to test and confirm the lower confidence historical drilling, and to establish the potential for JORC compliant Resource and Reserve estimates.

Since the previous Resource & Reserve estimates were completed, an additional 33 RC holes for 3,982m have recently been drilled at Golden Eagle. Final fire assay results have now been received from ALS in Perth for all holes.

The Golden Eagle pit has now been in operation since March 2012, and ore from the deposit has been feeding the adjacent processing facility since commissioning in August 2012.

Both of these areas also have good potential to deepen the adjacent pit designs with further drilling, with the effect of increasing the Resource & Reserve ounces and tonnes. Accordingly, a 500 metre follow up programme is being designed to further test these two areas.

Analysis

The new intersections prove continuity of Golden Eagle deposit footwall & main zone mineralisation at depth, and provide upside potential to expand the Resources & Reserves already defined.

They also demonstrate the potential to form the next deposit at Millennium's Nullagine Project.

The now fully operational gold process plant has a capacity of 1.5 Mtpa and at forecast head grade of 1.7 g/t Au is targeted to produce 78,000 ounces gold annually.

The gross operating margin (AUD/ounce poured) was A$804 for the 6 months to 30th June 2013. This produced an unaudited after tax profit of A$34.2 million for the 6 months ended 30th June 2013.

The headline after tax profit figure includes an unrealised derivative gain of $21.2 million related to the company's hedge book.

That Millennium is undervalued based on its earnings and margin metrics is axiomatic in a market undervaluing many gold stocks. However, Millennium has demonstrated it can earn significant profits at robust operating margins at current gold prices.

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