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WPG Resources Increases Tunkillia Gold Grade By 36%

WPG Resources (ASX:WPG) now has greater flexibility for strategic development of its Tunkillia Gold Project in South Australia after re-casting the resource estimate using higher cut-off grades.

Using a 1 gram per tonne cut-off in the primary zone, the main 223 deposit now has a resource of 12.3 million tonnes at 1.41g/t gold and 3.7g/t silver.

This represents a 36% increase in the estimated resource grade from the previously published resource of 26.3Mt at 1.04g/t gold using a 0.5g/t cut-off grade.

In January, WPG received Ministerial approval for the transfer of EL 4812 and EL 4495 covering the Tunkillia project from Helix Resources (ASX:HLX).

The company will now conduct an in depth review of the potential development scenarios including optimisation studies.

Results will set the platform for WPG to redefine the project parameters and advance a new exploration and development strategy.

WPG has not yet determined the most appropriate mining and processing strategy for the Tunkillia 223 deposit.

At this stage, it seems likely that an open pit mine will be developed, with the primary mineralisation treated by conventional CIP/CIL methods, with the lower grade oxide zone treated by heap leaching.

Tunkillia Gold Project

WPG acquired 70% of the project in May 2014 from Mungana Goldmines Limited (ASX:MUX). It subsequently acquired the remaining 30% from Helix in November.

Mineralisation was first discovered by Helix in late 1996, during a drilling program to test an extensive surface geochemical anomaly defined from calcrete sampling.

The decision to use a higher cut-off is in line with WPG's approach when it acquired the project to recast the resource estimate using a more realistic cut-off grade.

While this was expected to reduce the tonnage, it also increases the average grade.

Tunkillia 223 now has contained resources of 558,000 ounces of gold and 1.48 million ounces of silver.

The gold-silver mineralisation at the Tunkillia 223 deposit lies in the north western part of the Tunkillia tenement block, and a mineral claim application has been lodged over this area.

The 223 deposit has supergene oxide and primary components. Primary mineralisation is hosted within a NW-trending shear zone cutting Proterozoic granites.

A broad corridor of low-grade mineralisation is present, in which higher-grades are typically associated with greater intensity of steep to moderately dipping quartz veins.

Other prospects have been identified within the tenement block, and these other prospects will be more extensively explored now that WPG owns 100% of the project area.

Analysis

The 36% increase in Tunkillia Gold Project's estimated resource grades improves WPG's flexibility in developing the project.

An in depth review of potential development scenarios is now underway to determine the most appropriate mining and processing strategy.

Proactive Investors believes that with a contained resource of 558,000 ounces of gold and 1.48 million ounces of silver, Tunkillia could continue WPG chairman Bob Duffin's track record of lifting shareholder value.

Proactive Investors has a price target of $0.085 within 9-12 months.

WPG has cash and fixed term bank deposits of $3.48 million as at 31st December 2014.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.