Phoenix Gold receives Blue Funnel feasibility results

THE DRILL SERGEANT: Phoenix Gold has received the results of a recently-completed mining study of the company’s 95 per cent-owned Blue Funnel gold project in the Eastern Goldfields region of Western Australia.

The Blue Funnel project has a current Resource of 453,000 tonnes at 2.91 grams per tonne gold 42,480 ounces comprising 28,032 ounces (280kt at 3.11g/t) in the Indicated category and 14,448 ounces (172kt at 2.6g/t) in the Inferred category.

 

Blue Funnel mine location and company leases. Source: Company announcement

A mine optimisation/evaluation and design study for the Blue Funnel Resource was recently completed focused on the economic evaluation of mining the remaining Resource in the Blue Funnel Pit and completing a small cutback to the south.

Assumptions used in the study included:

–    Ore would be treated by a third party mill through a toll treatment agreement;

–    A gold price of $A1,600 per ounce;

–    Mining dilution of 10 per cent and mining recovery of 95 per cent;

–    Average metallurgical recovery of 94 per cent (assuming conventional processing); and

–    Mining costs derived from mining, drill and blast and haulage contractor quotes.

Phoenix said the study determined Blue Funnel could deliver $8.908 million in free cash flow, assuming a gold price of A$1,600/oz, from the treatment of 150,316t of ore at 3.49g/t gold for 16,877 ounces mined and 15,865 ounces recovered generating a total cash cost of $1,089 per recovered ounce including all royalties, capital, toll treatment and operating costs.

“The Blue Funnel project now joins Catherwood as the first two small scale mines to be developed by Phoenix to generate cash and grow the Resource base and work toward a larger scale longer term production profile,” Phoenix Gold managing director Jon Price said in the company’s announcement to the Australian Securities Exchange.

“Both mines have robust economics, even when factoring in contract mining rates and toll treatment costs, and have very low start-up capital requirements.”

Phoenix Gold also completed additional drilling to improve the potential of the southern cutback In April this year comprising 850 metres of RC drilling immediately to the south of the existing pit.

Results from this program included:
 
–    5 metres at 4.45 grams per tonne gold from 32 metres;

–    3m at 4.91g/t gold from 22m;

–    5m at 2.41g/t gold from 24m; and

–    4m at 2.25g/t gold from 23m.

The company said it had interpreted these results to represent the intersection of a splay off the Zuleika Shear, which hosts the Blue Funnel pit mineralisation.

It said further drilling across the mineralised corridor and depth is required to test this interpretation and if correct may define several new mineralised zones in and around Blue Funnel.