(MENAFN - ProactiveInvestors - Australia) Phoenix Gold (ASX: PXG) continues to reap the benefits of an aggressive 50,000 metre drilling campaign over the company's projects in Western Australia's Gold fields, with a string of positive drilling results providing resource upgrades.
The latest upgrade is at the Castle Hill deposit which now hosts 655,000 gold ounces, while just last week the Red Dam deposit increased by a third to 229,000.
Worth noting on Castle Hill is that the current resource envelope is from surface to 80 metres depth with little to no drilling beneath, with strike now over 7 kilometres and remains open in all directions.
Castle Hill also hosts 376,000 ounces of the resource in the higher confidence Measured and Indicated categories. A Pre-Feasibility study has commenced on stage 1 to assess optimal mining and processing routes, along with indicative capital and operating costs for mine development.
This highlights that the current resource for Phoenix could be just the tip of the iceberg, and if mineralisation continues at depth, then there is untold potential at the project.
The impact from the upgrade is that the global resource has now increased to; 32.4 million tonnes at 1.8 grams per tonne (g/t) gold for 1.835 million ounces.
Jon Price, managing director, talked to Proactive Investors today and said that the company is now well on track of achieving the 2.5 million gold ounce resource goal by the end of 2012, which will also include reserves of 500,000 ounces.
"We then have a plan of a Bankable Feasibility Study in mid-2013, with production starting in 2014 before ramping up to full production in 2015."
Well funded with stockpiles
Phoenix remains in a well funded position to continue the aggressive drilling campaign, with 6 million in cash at the end of the March 2012 quarter, but the company does have a funding ace up its sleeve.
Phoenix still has additional stockpiles of ore which can be monetised, and are likely to bring in between 1 million and 2 million in net cash over the next couple of years.
Acquisition of Kintore Gold delivers larger goldfields footprint
Phoenix is not only working on increasing contained metal, but has also been on the acquisition trail which includes the May purchase of Kintore Gold Project.
The company has entered into an agreement to wholly acquire the Kintore Gold Project, which adjoins its 10.99 million tonne at 1.6 grams per tonne for 559,000 ounces of contained gold Castle Hill project in Western Australia's goldfields region.
Highlighting the potential to define a major new gold camp in the region, ongoing drilling continues to extend the Castle Hill gold mineralisation, which is open in all directions.
Phoenix's EV/Resource valuation of less than 13 per gold ounce appears slight compared to a peer average which could be considered around 50.