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ABM Resources' Serves Up More Bonanza Grade Gold Discoveries From Old Pirate

ABM Resources (ASX: ABU) continues to deliver good news to the market today revealing high grade gold results from its Old Pirate deposit in the Northern Territory which has further extended mineralisation.

The company is working towards an updated resource, which is currently 427,000 ounces at 7.95g/t gold (top cut) or 565,000 ounces at 10.5g/t gold (uncut).

Highlight intersections include an extremely high grade result of 5 metres at 52.27 grams per tonne (g/t) gold from the Western Limb Vein, and 8 metres at 24.14g/t gold which has extended the Old Pirate South zone 90 metres down plunge.

Other notable intercepts include 8 metres at 3.22g/t gold, 1 metre at 18.7g/t gold, and 4 metres at 4.03g/t gold.

Darren Holden, managing director, commented: "This excellent round of drill results from Old Pirate continues to add confidence and extends the Old Pirate High Grade Deposit.

"The overall grades, widths and location of the extensions are consistent with our geological and statistical models."

Exploration progress

Exploration is in full swing at the Old Pirate Deposit, which is part of the Twin Bonanza Gold Camp.

The current drill program is still ongoing with a further 55 holes for 7,298 metres pending assay and 28 holes to be completed within the coming weeks.

Following this round of reverse circulation drilling ABM will mobilise a diamond rig to site.

This drill program will be followed by resource updates and further mining studies.

ABM is targeting a resource upgrade as well as an extension of the resource into target areas not previously tested.

The current resource stands at 427,000 ounces at 7.95g/t gold (top cut) or 565,000 ounces at 10.5g/t gold (uncut).

ABM also plans to drill test the Golden Hind discovery located 800 metres to the south of Old Pirate.

Old Pirate development potential

A Scoping Study released in May showed potential for ABM to develop a low cost, high profit gold at Old Pirate.

What is so impressive about the potential production from Old Pirate is the low total operating costs of around A$511 per ounce, which includes a cash cost of $383 per ounce.

This would make ABM a low cost producer, and provide the company with a potential margin of around $1,000 per gold ounce.

Gold recoveries of up to 95% can be derived from the 308,000 ounce gold resource for Stage 1, and a total 261,000 ounces is expected to be recovered.

Multiplied by the $1,000 margin this would deliver ABM $261 million in profits, based on current prices.

Figures in the Scoping Study were based on a gold price of $1,600 per ounce. Due to the low operating costs of the project, a sensitivity analysis was run for a $1,200 per ounce gold price which also showed strong cash flows.


ABM has achieved a global resource of 3.3 million ounces of gold resources across its projects in less than two years.

This has been achieved with overall discovery and definition costs of around $4 per ounce based on expenditure across the three prospects.

Importantly, the company is well capitalised to be able to achieve its milestones in 2012 and 2013, with $23 million in the bank at the end of the June quarter.

In a further move to secure ABM's financial future, the company is investigating the possibility of generating cash from its projects at a low capital cost, with a potential production agreement with Tanami Gold, which has operations nearby.

With no need to build a mill, ABM could become a cash flow positive company with very minimal cash outlay.

With a budget of $12 million for the 2012 field season, investors are likely to see more news flow as the company continues aggressive exploration.

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