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Fekola drill results fuel Papillon rebound.

Nick Sas, The West Australian July 24, 2013, 7:35 am

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Fekola drill results fuel Papillon rebound

The West Australian ©

Shares in Perth-based gold explorer Papillon Resources have almost doubled in less than a month, with the West African play ignoring the gloom surrounding the gold sector to bounce back off a string of positive news announcements.

Yesterday Papillon, which is developing its 300,000 ounce a year Fekola gold project in Mali, announced new drilling results outside its current 4.21moz resource estimate, which it said showed "extensive mineralisation". The hits included 75m at 4.66 grams a tonne and 18m at 2.81 g/t.

Papillon managing director Mark Connelly said the thickness and grade of the intercepts highlighted the "significant exploration upside" at Fekola.

Mr Connelly said the area explored was considered to be low-grade or barren. An updated resource for the project is expected in September.

Papillon shares made small gains yesterday ending 2.5¢ higher at $1.12.

Its shares traded as high as $1.66 in February before the gold price drop led it - and the majority of listed gold stocks - on a rapid downward spiral.

Papillon dropped as low as 58.5¢ in late June. In a broader market in which gold stocks are still looked on with suspicion, its recovery has impressed market watchers.

The gold price has also shown signs of a hesitant recovery, in turn helping gold stocks such as Papillon. Gold has risen from the $US1200/oz mark at the start of the month to $US1330/oz yesterday.

Yesterday's announcement adds to Papillon's feasibility study of last month. The company said Fekola would produce $US130 million ($139.7 million) annual operating cash flow over its nine-year mine life at a gold price of $US1100/oz.