(MENAFN - ProactiveInvestors - Australia) Northwest Resources (ASX: NWR) has begun a planned infill diamond drilling program at its Blue Spec Shear Gold-Antimony Project to increase the confidence of the Indicated resource at the Blue Spec and Gold Spec deposits.
Over 5,000 metres of drilling is planned at Blue Spec, with a second rig to be mobilised to site shortly, before the rigs move to the Gold Spec deposit.
Importantly, it is expected that following the drill program the new resource will enable a robust maiden ore reserve to be prepared as part of the ongoing Definitive Feasibility Study (DFS) for the project.
John Merity, managing director, commented: "Our drilling programs at Blue Spec and Gold Spec to date have successfully focused on confirming the continuity of the structures and very high grades at depth, rather than density of drilling data necessary for estimating Indicated mineral resources and ore reserves.
"As we pursue our ambitious development schedule for this project, the infill program is a further important step towards confirming to our investors and potential offtake partners the confidence that Northwest management has in developing these high grade ore bodies."
Currently, the Indicated resource for Blue Spec and Gold Spec is 646,000 tonnes at 15.8 grams per tonne (g/t) gold and 1.2% antimony for 328,000 ounces of gold and 7,900 tonnes of antimony.
Drilling is expected to continue into January, while the DFS is slated for completion in the March quarter of 2013.
Low cost, high grade gold operation
A recent Scoping study indicates the strong potential for the project to be a low CAPEX, low cost and high margin start-up gold operation.
Northwest's plan is to bring the Blue Spec and Gold Spec deposits into production in 2013 as a high grade narrow vein underground mining operation producing a gold enriched antimony concentrate for direct sale.
A preliminary economic assessment indicates an internal rate of return of 62% and a net present value (12%) of A137 million.
C1 cash costs are low at 400 per ounce, including antimony credits, while total cash costs are 833 per ounce, including antimony credits.
Northwest intends to expand the project beyond its initial five year mine life through the discovery of additional high grade deposits along the highly mineralised Blue Spec Shear Zone.