Kalgoorlie based Phoenix Gold (ASX: PXG) is now a cash flow generating gold explorer, with the company reaching the milestone of pouring the first gold bar.
The bar was produced from milling of ore through an agreement with FMR Investment’s Greenfields mill, which is located just 25 kilometres south of Phoenix’s southern tenements, and is well serviced by haul roads in all directions.
The ore used was sourced from historic stockpiles and is around 400 ounces (see picture), with the Phoenix expecting to pour three bars from the current campaign, which would produce around 1200 ounces.
The company currently has around 19,000 ounces stockpiled in ore above ground.
Jon Price, managing director, told Proactive Investors today that the company aims to make a margin of between $500 and $600 an ounce based on the current spot price, with the company looking to initiate a second campaign next year.
"The cash from the treatment of these historic stockpiles will enable additional exploration work to be carried out to continue growing our Resources and will fund the development of our first mine next year.
"We have a very busy 2012 ahead with large drilling programs underway, more historic stockpiles to treat and the development of our first gold mine.”
The FMR agreement follows the execution of a Memorandum of Understanding with Kalgoorlie Mining Company (ASX: KMC) for the treatment of up to 300,000 tonnes per annum of Phoenix ore through the Bullant processing facility - which is forecast to be in operation by June 2012.
Phoenix conducting extensive drilling campaigns
Highlighting how the company continues to push the Kalgoorlie based operations forward, work continues on the up to two year drilling program to increase the resource base at the Castle Hill and Broads Dam Projects before testing early-stage exploration targets principally within the Ora Banda – Grants Patch gold camp.
In the 2012 financial year, phase one of the program consists of 32,000 metres of a combination of reverse circulation drilling for resource growth and rotary air blast drilling for target generation in greenfields areas.
To date over 3800 metres have been drilled at the Broads Dam project and 3840 metres at Castle Hill, with results expected in the December 2011 quarter.
Castle Hill currently has a resource of 526,000 gold ounces.