Phoenix Gold (ASX: PXG) has outlined an extensive 55,000 metre drilling campaign to be completed over the next year, which is already bearing fruit with the gold strike zone extended at the Castle Hill Project in the Goldfields region of Western Australia.
The drilling has been successful in confirming continuity of mineralisation over 600 metres to the north increasing the strike length of Castle Hill to over 5,000 metres.
Highlights from the latest drilling include broad zones such as 0.69 grams per tonne (g/t) gold from 57 metres.
These zones are supported by higher grade intersections such as 2 metres at 7.26g/t gold from 58 metres; 4 metres at 2.85g/t gold from 65 metres; and 3 metres at 3.6g/t gold from 27 metres, including 1 metre at 10.3g/t gold.
Castle Hill currently hosts a resource of 10.99 million tonnes at 1.6g/t gold for 559,000 ounces.
Jon Price, managing director, commented on the positive news:
"Drilling at Castle Hill consistently demonstrates the Project's million ounce potential and we look forward to testing the depth potential below 90 metres with our planned drilling program this year.
"The mineralisation starts at surface and contains high volume low strip ratio free milling ore within the tonalite combined with higher grade shear hosted lodes within the adjoining basalt. This translates into a large, low cost open cut gold mine and Studies have commenced to identify the optimal development and production pathway."
Well funded with gold production options
Phoenix had $1.4 million in cash at the end of 2011, with the company set to receive a $7.16 million cash boost from the exercise of options at the end of February, which are currently in the money and also underwritten.
The company has other cash generating options, highlighted by the November 2011 transition to gold producer from the milling of Catherwood ore through an agreement with FMR Investment's Greenfields mill.
Where the story gets even more interesting for Phoenix is that the company said towards the end of last year that it will seek to treat the remaining 25,000 tonnes of stockpiled ore in early 2012, which will generate additional cash flow.