Gold-producer Millennium Minerals (ASX:MOY) has intersected further substantial gold zones at the Au81 deposit, located just 2 kilometres from the company's Nullagine Gold Project processing facility in Western Australia.
Multiple intersections confirm Au81 deposit main zone mineralisation extends over 180 metres strike, and shows upside potential both down dip and along strike.
Intersections are broad, shallow and contain high grade cores. Significant gold intercepts include:
- 22 metres at 3.64 g/t gold from surface, including 3 metres at 17g/t from 4 metres;
- 15 metres at 4.60 g/t from 24 metres, including 9 metres at 6.62 g/t from 24 metres;
- 5 metres at 11 g/t from 6 metres, including 2 metres at 24 g/t from 6 metres;
- 11 metres at 4.17 g/t gold from 13 metres, including 1 metre at 28 g/t from 19 metres.
These assays were amongst numerous other significant intercepts.
Drilling was designed to upgrade the maiden 2013 Inferred Resource estimate for Au81 to the higher confidence Measured and Indicated categories, and based on these results, a restated Mineral Resource will be estimated commencing June 2014.
Millennium CEO added:
"These promising drill results confirm our confidence in the Au81 deposit with follow up drilling to commence shortly.
"Importantly, upgrading the maiden Inferred Mineral Resource to the Measured and Indicated categories enables us to bring the resource into the mine plan more rapidly."
The Au81 Deposit has a previously JORC-reported Inferred Mineral Resource of 1.5 Mt at 1g/t gold for 47,900 gold ounces, using a 0.5 g/t cut off grade.
Results confirm the core of the main zone of mineralisation as thick, steep, west to sub-vertically dipping lens-shaped pods which are predominantly north striking, contain moderate to high grades, and extend almost continuously over 180 metres of strike.
They are hosted in a medium-grained,quartz sandstone.
The intersections and their geometry suggest that there is some north-plunging shoot control to the high grades, potentially at the intersections of the north-south structure with the south-west splays.
It also appears that there may be multiple stacked arrays of lenses, and more drilling is being planned to evaluate these further.
The results also indicate there is scope for strike extensions, and that there is economic potential for the western zone of mineralisation, and elsewhere at the deposit, which importantly remains open at depth.
Follow up drilling is currently being planned for all these targets.
The new drilling will infill around previous Millennium and historical holes, and the combined dataset will be used
to estimate an updated Mineral Resource.
A Profitable Gold Miner
Last reporting period, Millennium achieved a record quarter at Nullagine with production rising 33% on the last quarter to 18,762 ounces.
A maiden audited 2013 after tax profit of $41.7 million was declared.
Notably, production was above its previous guidance of 16,000 to 18,000 ounces of gold due to the higher tonnage milled.
Sales of 18,925 ounces at an average gold price of $1,458 per ounce generated revenue of $27.6 million at a sustaining cash cost of $1,191 per ounce.
Mine level EBITDA was $7.16 million while mill throughput was 426,473 tonnes, 19% above 2013 quarterly average.
The company's production guidance for the June 2014 quarter is between 16,000 and 18,000 ounces of gold and 76,000 ounces for the 2014 financial year.
Millennium previously agreed with its senior lenders to undertake further hedging of 60,000 ounces to provide price extended risk cover.
When combined with existing hedging, the new structure will be equivalent to about 70% of forecast production over the term of the Senior Facility and represent 26% of the contained gold in the company's Ore Reserve.
At 31 March 2014, the Company's "in the money" hedge book had a mark-to-market valuation of $11.7 million ($14.6 million at 31 December 2013) based on the spot price of $1,386 per ounce at that date.
The remaining hedge structure, prior to the additional hedging mentioned above, requires 60,236 ounces to be delivered by September 2015 at an average forward price of $1,613 per ounce.
Cash and bullion on hand amounted to $8.9 million at 31 March 2014.
These latest drilling results confirm Millennium's expanding high grade gold deposit at Nullagine.
The Nullagine Gold Project continues to perform, with the higher grade ore from ABC and D Reef deposits at Golden Gate and higher mill throughput contributing to the last quarter's 33% rise in gold production.
Looking ahead, catalysts include earnings from gold production in the June quarter, the updated Resource and then Ore Reserve, and further exploration work.
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