Corvus Gold (TSE:KOR)(OTCQX:CORVF) unveiled Wednesday the results of a phase one resource expansion drilling program at its North Bullfrog project near Beatty, Nevada, following on the heels of a positive preliminary economic assessment (PEA) for the property yesterday.
The company said that seven of the nine holes drilled to test the expansion potential of the defined Sierra Blanca and Jolly Jane deposits have returned "encouraging results".
In the Sierra Blanca area, hole NB-12-118 intercepted 46 metres of 0.56 grams per tonne (g/t) gold, 250 metres north with a similar intercept 400 metres north in hole NB-12-119.
These holes, together with hole NB-12-117, drilled 400 metres to the west of Sierra Blanca, suggest significant resource expansion potential exists to the north and west of the current Sierra Blanca deposit with "markedly higher grades", the company said.
Notable intercepts were also returned from holes NB-12-124 and 125, which targeted the north-eastern extension of mineralization toward the Jolly Jane deposit.
Hole NB-12-124 returned 39.6 metres of 0.24 g/t gold and 0.50 g/t silver, including 13.7 metres of 0.50 g/t gold and 0.60 g/t silver, while hole NB-12-125 hit 54.9 metres of 0.21 g/t gold and 0.64 g/t silver, including 13.7 metres of 0.38 g/t gold and 1.10 g/t silver.
These results from the 2012 phase one step out drill program were not included in the initial PEA for the project, which was announced Tuesday.
The PEA produced a robust positive economic analysis for a conceptual, low capex, heap leach project that generates an average annual gold production of 57,700 ounces over 12.8 years, indicating a pre-tax, pre-royalty net present value of $118.3 million and an internal rate of return of 28.8 percent at a $1,300 per ounce gold price and a five percent discount rate.
Total initial capital expenditure is seen at $68.8 million with a 2.6-year payback period for the project, which has a large in-pit resource of 1.1 million ounces contained and 747,000 ounces of recoverable gold.
"The thick and higher grade intersections returned in this initial step-out drilling are encouraging for Corvus and strongly support our goal of doubling the existing estimated resource by year end," said CEO Jeff Pontius.
"On the heels of our PEA released yesterday these results bode well for an enhanced project size and potentially improved financial performance in the future.
"It is exciting that some of our best holes have been drilled to the north and west of the existing deposits, under large expanses of shallow cover which could contain significant new deposit potential."
Indeed, the 2012 phase one program also returned results from the Jolly Jane target, where two holes were drilled. One hole 200 metres to the north and another 400 metres to the north returned broad intercepts, said the company, including hole NB-12-123. The 400 metre step out hole intersected 138.7 metres of 0.27 g/t gold, including 32 metres of 0.50 g/t gold.
"The intensity of the alteration and mineralization in this northern-most hole suggests the system is expanding in size and grade in this direction," Corvus said in a statement Wednesday.
The main focus of the drilling program has been to test the overall resource footprint size to improve the design of a 30,000 metre phase 2 drill campaign, which is currently being permitted and scheduled to begin later this year.
Corvus said that the results from Jolly Jane and Sierra Blanca in phase one show that the resource footprint is considerably larger than previously defined. Further step out and infill drilling will therefore be a priority in phase two, the company added.
The two holes drilled on southern step-outs in Sierra Blanca along the Savage Valley found only anomalous gold, with additional work still required to assess if the mineralization continues to the south beyond the company's existing drill pattern.
Pontius continued: "We are also looking forward to results from our diamond core drilling program into the high-grade Yellowjacket feeder system that could hold significant potential.
"The company is focused on rapidly advancing the project down the path to a potential production decision."
Turning attention to the phase one diamond drilling program, three holes have been completed into the Yellowjacket feeder system to date and at least two more are planned. The Yellowjacket target is in the northern part of the district and has returned results like 11.9 g/t gold over 6.1 metres in earlier drilling.
The company said it expects initial results from this drilling in the next few weeks.
In addition, large diameter core will be drilled in the key deposits of the project allowing additional metallurgical testing for use in a project development decision planned for later this year.
Corvus has increased its overall land holding at the North Bullfrog Project to 43 square kilometres by staking 297 federal unpatented mining claims. The new staking covers potential extensions of the North Bullfrog gold system, as well as ground that may be needed for any potential future mining operations.
The company controls 100 percent of the property, which is adjacent to a major highway and power corridor.
North Bullfrog currently includes numerous prospective gold targets with four - Mayflower, Sierra Blanca, Jolly Jane and Connection - containing an NI 43-101 compliant estimated indicated resource of 24 million tonnes at an average grade of 0.29 grams per tonne (g/t) gold for 224,400 ounces of gold.
These same four targets hold an additional inferred resource of 468 million tonnes at 0.19 g/t gold for 2,835,000 ounces of gold (both at a 0.1 g/t cutoff), with appreciable silver credits.
The PEA envisages average production of 70,000 ounces of gold per year over the first three years, with total cash operating costs of $815 per ounce gold with an average of $673 per ounce gold over the first three years.