Phoenix Gold (ASX: PXG) has intercepted gold mineralisation...

Phoenix Gold (ASX: PXG) has intercepted gold mineralisation below the current Resource at its Castle Hill Project in Western Australia’s Goldfields, the state’s largest gold discovery since Tropicana, in a maiden diamond drilling campaign.

Results indicate mineralisation continues at depth and remains open in all directions, with new drilling expected to substantially increase the current Resource well beyond 1 million gold ounces.

Phoenix is well advanced on a Conceptual Mining Study, based on the existing Resource and including a standalone processing plant at Castle Hill, which is scheduled for delivery in the December 2012 quarter along with a Resource update.

Highlights from the drilling program include 33 metres at 3.2 grams per tonne (g/t) gold from 189 metres; 12 metres at 6.2g/t gold from 109 metres; 39 metres at 1.65g/t gold from 159 metres; 13 metres at 4.5g/t gold from 172 metres; 21 metres at 1.83g/t gold from 128 metres; and 18 metres at 1.9g/t gold from 125 metres.

The current Castle Hill Resource stands at 21.71 million tonnes at 1.5g/t gold for just over 1 million ounces, and only extends to a depth of 85 metres below surface.

Significant results from the recent 13-hole, 3,167 metre diamond drilling program are over twice that depth.

Jon Price, managing director, commented: “Castle Hill continues to demonstrate its multimillion ounce potential and we are just starting to see that potential at depth with the first diamond drilling program.

“Not only have the results delivered significant mineralisation well below the current Resource envelope, analysis of the drill core is confirming our geological understanding of the controls on mineralisation.

“We look forward to releasing a full geological summary of the Castle Hill project in coming weeks aimed at demonstrating how robust the project is and why we believe the project is emerging as the latest large scale gold system in the Western Australian Goldfields.”

Depth potential

The drilling program successfully produced a number of substantial mineralised intersections beneath the current Resource envelope to a depth of 200 metres.

Results showed a combination of large widths at depth with improving grades coupled with narrower and much higher grade mineralisation consistent with the changing weathering profile at depth.

The results demonstrate that mineralisation continues at depth and has similar characteristics to that seen in previous drill programs.

The large mineralised system is now 9 kilometres long, up to 600 metres wide and open in all directions.

Conceptual Mining Study

The Conceptual Mining Study underway at Castle Hill includes pit optimisation and design, a metallurgical review, mine scheduling and economic evaluation using the current Resource model to determine optimal mining and processing pathways.

The study, however, will not include the potential Resource increases from the recent drilling program.

This study, along with other studies being completed on Phoenix’s projects within a 15 kilometres radius of Castle Hill, will also assess the economic viability of the construction of a standalone processing facility plant at Castle Hill.

Castle Hill has the potential to be a near surface large scale open cut mine with moderate to low strip ratio processed by conventional milling with excellent metallurgical recoveries all within 50 kilometres of Kalgoorlie.

Castle Hill – WA’s latest large-scale gold discovery

The Castle Hill Project is demonstrating its potential to be the largest Western Australian gold discovery since AngloGold Ashanti and Independence Group’s (ASX: IGO) Tropicana Gold Mine.

The project is located on the highly prospective Kunanalling shear zone in the heart of the Western Australian Goldfields, less than 50 kilometres from the regional mining centre of Kalgoorlie.

The project area lies on the western margin of the Coolgardie Domain of the Norseman-Wiluna Belt, and is transected by the Kunanalling Shear Zone.

At Castle Hill the Kintore Tonalite (porphyry) is the main host to gold mineralisation complemented with high grade shear hosted lodes in the adjacent basalt.

http://www.proactiveinvestors.com.au/companies/news/33295/phoenix-golds-drilling-expected-to-grow-castle-hill-gold-resource-beyond-1moz--33295.html