Highlights:TOLL MILLING CAMPAIGN AGREEMENT EXECUTED WITH FMR...

Highlights:

TOLL MILLING CAMPAIGN AGREEMENT EXECUTED WITH FMR INVESTMENTS

ORE TREATMENT COMMENCED FROM CATHERWOOD SURFACE STOCKPILES

CASH FLOW GENERATED TO FUND FURTHER EXPLORATION AND MINE DEVELOPMENT

DRILLING PROGRAM ON TRACK WITH CASTLE HILL RESULTS EXPECTED IN DECEMBER

Overview:

Phoenix Gold Limited (ASX: PXG, “Phoenix”) is pleased to announce that haulage and processing of previously stockpiled ore from the Catherwood mine has commenced through FMR Investment’s (“FMR”) Greenfields mill (Figure 1). This follows the signing of a Toll Treatment Campaign Agreement with FMR in October.
The Greenfields mill is a private toll treatment facility located 25 kilometres south of Phoenix’s southern tenements and is well serviced by haul roads in all directions.

Under the terms of the agreement, Phoenix will deliver an initial 25,000 tonne ore parcel to the mill and will pay a cost plus toll treatment charge on a $A per tonne basis. The processing circuit has been configured to enable optimal conditions to achieve maximum recovery and minimal costs. Treatment of the ore will also provide valuable metallurgical information and confirm gold recovery values used in the Catherwood Mine Feasibility Study.
“This is a significant milestone for Phoenix as we produce our first gold and work towards becoming a self-funded explorer. The cash flow generated will enable further exploration and development of the first in a series of gold mines in our project pipeline,” Managing Director Jon Price said.
“We also look forward to working with the team at FMR to finalise the long term agreement that will provide Phoenix with milling options to maximise benefit and minimise haulage distances,” Mr Price said.
The FMR agreement follows the execution of a Memorandum of Understanding with Kalgoorlie Mining Company for the treatment of up to 300,000 tonnes per annum of Phoenix ore through the Bullant processing facility. The MOU was signed earlier this month and contemplates the preparation and execution of a binding agreement within 12 months.
Work continues on the 18 to 24 month drilling programme announced last month to increase the resource base at the Castle Hill and Broads Dam Projects before testing early-stage exploration targets principally within the Ora Banda – Grants Patch gold camp.
In the 2012 financial year, phase 1 of the programme consists of 32,000 metres of a combination of reverse circulation (“RC”) drilling for resource growth and rotary air blast (“RAB”) drilling for target generation in greenfields areas.
To date, 3,808m have been drilled at the Broads Dam project and 3,840m at Castle Hill with drilling continuing through the December Quarter. Results from the Castle Hill programme are expected to be released in December following data validation and QA/QC checks.
Project development work also continues on a number of advanced resources including the recently announced Catherwood Feasibility Study (August 1, 2011) and the Rayjax, Nazzaris, Blue Funnel and Outridge mines.
“Catherwood is likely to be the first significant mine development for us and we are working to obtain the necessary statutory approvals and make the final investment decision in the December Quarter,” Mr Price said.