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Phoenix Gold strikes bonanza gold at Castle Hill, eyes million ounce resource

Phoenix Gold (ASX: PXG) continues to build momentum at the highly prospective Castle Hill Project in the Goldfields region of Western Australia.

The latest reverse circulation results include some bonanza intersections, with the highlights:

- 10 metres at 9.92 grams per tonne (g/t) gold from 18 metres, including 2 metres at 27.36g/t gold;
- 15 metres at 6.63g/t gold from 39 metres, including 2 metres at 39.25g/t gold; and
- 8 metres at 7.32g/t gold from 60 metres.

The company is already looking to upgrade the current 10.99 million tonnes at 1.6 g/t gold for 559,000 ounces in the March quarter of 2012.

Jon Price, managing director, commented on the good news and said: “Castle Hill gets more and more exciting every time we put a drill hole into it. The resource has more than doubled from 253,000 ounces to 559,000 ounces at improved grade in just nine months at a discovery cost of less than $8 per ounce.

“There is the potential here for a million ounce gold project on a major shear structure in a relatively underexplored part of the goldfields 50 kilometres from Kalgoorlie and I believe this region has many more of these waiting to be discovered.”

Castle Hill is near surface, free milling material and comprises both large tonnage base-load style mineralisation adjacent to higher-grade, shear-hosted lodes.

The latest drill results confirmed the mineralised system has a contiguous strike length of more than 4 kilometres and mineralisation remains open along strike and at depth.

Phoenix Gold - a cash flow generating explorer

Phoenix recently transitioned into a cash flow generating gold explorer with the execution of an agreement with the nearby FMR Investments Greenfields mill, using ore stockpiled above ground from the Catherwood Mine.

Under the agreement Phoenix delivered an ore parcel to the mill and paid a toll treatment charge on a $A per tonne basis, with the processing circuit configured under the direction of the company's management to enable optimal conditions to achieve maximum recoveries and minimise costs.

Where the story gets even more interesting for Phoenix is that the company will seek to treat the remaining 25,000 tonnes of stockpiled ore in early 2012, which will generate additional cash flows for the company.

Phoenix also has a deal 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 operational in mid-2012.