Phoenix Gold (ASX:PXG) has started development of its Kintore West open cut gold mine in Western Australia on schedule, as part of the Castle Hill staged development plan.
The initial stage of mining delivers 380,000 tonnes of mill feed at 2.03g/t for 24,400 ounces mined, and 891,000 tonnes of heap leach feed at 0.6g/t for an additional 17,130 ounces.
Total volume mined from the initial pit is 1.9 million bcm with a waste to total ore strip ratio of 3:1, and upfront development capital costs of $900,000.
Alliance Contracting mobilised and a small site base established, with first gold production at the Greenfields Mill expected early in the December quarter.
Jon Price, managing director for Phoenix, commented: "Mining a series of staged open pits with treatment at the Greenfields Mill, working with Norton Gold Fields (ASX:NGF) on the license to mine for the Castle Hill Stage 1 development and unlocking the value of mined lower grade ore using heap leaching technology has the potential to generate three streams of cash flow."
Cash to fund exploration
Cash flow from operations will fund exploration programs at Castle Hill and Kundana North, as well as the purchase of a 2.3Mtpa heap leach plant from St Ives Gold Mining Company for $2 million.
Notably, the development of Castle Hill Stage 1 with Norton Gold Fields (ASX:NGF) potentially adds a further $17.5 million to cash at bank over 2 years.
The Stage 1 Castle Hill Project has Castle Hill has Ore Reserves of over 280,000 ounces of heap leach gold in addition to 878,180 ounces of mill feed ore.
The 2.3 million tonne per annum St Ives heap leach processing facility is well maintained and located just 100 kilometre to the south of Phoenix’s projects.
A detailed engineering study and project financing for heap leaching is also underway, and a two year agreement is already in place with FMR Investments for the processing of 600,000 to 800,000 tonnes of ore annually.
Development of Kintore West is a significant milestone for Phoenix and will be the first in a series of mines under the staged development plan.
There is good momentum building at Castle Hill; significant price catalysts ahead include commencement of gold production in the December quarter and completion of the heap leach plant acquisition.
Analysis
On the back of the Definitive Feasibility Study completed in February, Phoenix has adopted a three pronged staged development approach with prudent capital management and retaining optionality into the future.
Utilising existing infrastructure, competitive service contracts and a highly skilled local workforce based in Kalgoorlie-Boulder, the company aims to grow the business steadily.
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