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Dated: 16th October 2014
PHOENIX POURS FIRST GOLD FROM KINTORE WEST
STAGED DEVELOPMENT PLAN UPDATE
ASX: PXG, PXGOA
HIGHLIGHTS
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Gold production commenced at Greenfields Mill from Kintore West open pit
Mining, haulage and ore treatment progressing on schedule
Initial Kintore West pit forecast to produce 380kt of mill feed grading 2.0g/t Au
for 23,000 ounces recovered and 890kt heap leach feed at 0.6g/t Au stockpiled
for future treatment1
Current mine plan has three open pit mines following Kintore producing a total of
85,000 - 90,000oz over an initial 2 year period2
The four mines to generate A$10 – $12m net cash at a gold price of A$1,350/oz2
License to mine agreement for development of Castle Hill Stage 1 progressing
with Norton Gold Fields
Updated heap leach feasibility study on track for completion in the December
Quarter 2014
Phoenix Gold Ltd
ABN 55 140 269 316
Figure 1: Phoenix team with first gold bar from the Kintore West mine
73 Dugan Street
PO Box 100
Kalgoorlie WA 6430
Phone +61 8 9021 2704
Fax +61 8 9021 3393
www.phoenixgold.com.au
[email protected]
1
As announced on 4 August 2014
As announced on 10 February 2014
2
16th October 2014
Overview
Phoenix Gold Limited (ASX: PXG) (“Phoenix” or the “Company”) is pleased to announce first gold
production from the Kintore West open cut, part of the Castle Hill Stage 2 project area on the highly
prospective Kunanalling shear zone in the heart of the Western Australian Goldfields (Figure 2). The
project is 55 kilometres northwest of the City of Kalgoorlie – Boulder on existing roads with minimal on
site infrastructure required to service the mine and workforce.
Figure 2: Kintore project location and regional geology
“It is a credit to the Phoenix team and our contract partners to have commenced mining, haulage and ore
treatment from Kintore on schedule and budget. Ore treatment at the Greenfields Mill is performing very
well with higher than expected throughput rates and excellent gravity and overall gold recoveries,”
Managing Director Jon Price said.
“In line with our staged development plan, Kintore, which is part of Castle Hill Stage 2, is the first in a
series of open cut developments that will contribute cash to the business. We continue to progress the
joint venture with Norton Gold Fields for the development of Castle Hill Stage 1 and are on track to
complete the updated heap leach feasibility study for treatment of lower grade ore mined this quarter,”
Mr Price said.
Page 2 of 9
Mining at Kintore commenced on schedule in early August with the initial stage delivering 380,000t of mill
feed grading 2.0g/t for 24,400oz mined and 891,000t of heap leach feed grading 0.6g/t for an additional
3
17,130oz mined . Total volume mined from the initial pit is 1.9M bcm with a waste to total ore strip ratio
of 3:1. The upfront development capital cost was A$900,000 in line with budget as a result of a wellexecuted mobilisation schedule by Alliance Contracting Pty Ltd and MLG Oz Pty Ltd. All contractors are
utilising Kalgoorlie-Boulder and Coolgardie for site services, workforce base and supply wherever possible
given the close proximity of the operations.
Mill feed ore is being processed at FMR Investments’ Greenfields Mill in Coolgardie (Figure 1) under
4
existing agreements with the first gold shipped from site to the Perth Mint for refining this week. The
Kintore West ore will be treated in discrete campaigns under Phoenix management to produce 23,000oz
at a recovery rate of 94%.
Figure 3: Castle Hill gold camp – Drilling target plan and mine locations
3
4
Page 3 of 9
As announced on 4 August 2014. Mine plan based on Indicated Resources and Ore Reserves as announced to the ASX on 4 February 2014.
See also Qualification and Forward Looking Statements on pages 8 and 9 respectively
As announced on 14 April 2014
16th October 2014
16th October 2014
Staged Development Plan Update
Phoenix continues to progress the three tiered approach under the staged development plan to generate
cash flow streams from each of the following:
1.
Contract mining a series of open cut mines and toll milling at the Greenfields Mill
2.
Development of Castle Hill Stage 1 under JV with Norton Gold Fields (“Norton”)
3.
Heap leach treatment of mined and stockpiled lower grade ore at Castle Hill
The staged development plan study was a subset of the larger scale DFS and is based on the current
Mineral Resources and Ore Reserves, which form the basis for reporting a production profile. Mining
Consultants Golder Associates completed the mine optimisations and designs based on geological models
prepared by Cube Consulting. As part of the study, smaller scale, shallow open pits were evaluated at
increased cut off grades to minimise up front capital, accelerate production and utilise existing
infrastructure with spare capacity in the region.
1. Phoenix mining and milling
Kintore is the first in a series of mine developments planned to deliver 85,000 - 90,000oz over an initial 2
year period generating a net cash contribution to the business of A$10 - $12 million at a A$1,350/oz gold
price. The current mine plan, initially comprising four open pit developments, is summarised below:
Phoenix mining and third party milling
JORC 12 Mineral Resources (Measured and Indicated)5
Tonnes (at 0.8g/t cut-off)
Tonne
12,360,000
Grade
g/t Au
1.84
Ounces
733,000
Tonnes (at 0.8g/t to 1g/t cut-off)
Tonne
4,950,000
Grade
g/t Au
1.82
Contained gold
Ounces
289,800
Ore Mined (Kintore West, Burgundy, Red Dam, Nazzaris)
Tonne
1,303,000
Waste mined
Tonne
11,800,000
Heap leach ore mined
Tonne
891,000
T:T
5.4
Ore milled at Greenfields Mill (at 1.0 to 1.2g/t cut-off)
Tonnes
1,303,000
Gold grade
g/t Au
2.24
%
93.0
Ounces
87,157
Contained gold
JORC 12 Ore Reserves (Proven and Probable)
5
Initial mining inventory over 2 years
Stripping ratio – waste to total ore (mill and heap leach)
Initial milling summary over 2 years
Recovery
Recovered gold
Table 1 – Phoenix mining and milling physicals summary
Page 4 of 9
5
As announced on 4 August 2014. Mine plan based on Indicated Resources and Ore Reserves as announced to the ASX on 4
February 2014. See also Qualification and Forward Looking Statements on pages 8 and 9 respectively
16th October 2014
2. Norton Joint Venture arrangements
6
In the March Quarter 2014, Phoenix delivered to Norton separate Feasibility Studies on the Mick Adams
7
and Wadi projects (Castle Hill Stage 1) in accordance with an option to mine and treat agreement .
Subsequently in August 2014 Norton notified Phoenix it had exercised its option to enter into a mine and
treat ore agreement. Phoenix and Norton are now proceeding to finalising terms of a formal Licence to
Mine and Ore Sale Agreement.
In addition, under the terms of the agreement:
•
•
•
All upfront capital development is funded by Norton
Mining, haulage , milling and rehabilitation is conducted and funded by Norton
Phoenix receives 50% of the cash surplus as the projects become cash positive on a
production cost basis.
The feasibility studies delivered a net cash contribution to the business of A$17.5 million (at a gold price
of A$1,400/oz) over an 18 month period from operating parameters summarised below:
Castle Hill Stage 1 JV with Norton Gold Fields
JORC 12 Mineral Resources (Measured and Indicated)
Tonnes (at 0.8g/t cut-off)
Tonne
25,730,000
Grade
g/t Au
1.50
Contained gold
Ounces
1,211,000
Tonnes (at 0.8g/t cut-off)
Tonne
10,680,000
Grade
g/t Au
1.71
Contained gold
Ounces
588,380
Ore Mined (Mick Adams/ Kiora and Wadi open pits)
Tonne
2,330,000
Waste mined
Tonne
14,470,000
Heap leach ore mined
Tonne
2,000,000
T:T
3.3
Ore milled at Paddington Mill
Tonnes
2,330,000
Gold grade
g/t Au
2.03
%
94.0
Ounces
142,000
JORC 12 Ore Reserves (Proven and Probable)
Initial mining inventory over 18 months
Stripping ratio – waste to total ore
Initial milling summary over 18 months
Recovery
Recovered gold
Table 2 – Castle Hill Stage 1 JV mining and milling physicals summary
6
Page 5 of 9
As announced on 21 February 2014
7
For a detailed summary of agreements in place with Norton, please refer to the Solicitor’s Report within the Prospectus dated 20 October
2010.
16th October 2014
3. Heap Leaching
The staged development approach also enables the potential for stockpiled lower grade ore mined from
Castle Hill to be treated through a heap leach facility. This processing pathway would complement the
milling of the higher grade material and provide an additional source of internal cash flow generation at
very competitive unit costs with the ore carrying no mining costs.
On 11 July 2014, Phoenix announced it had executed a letter agreement with St Ives Gold Mines Pty Ltd to
purchase 100% of the 2.3Mtpa St Ives heap leach processing plant located near Kambalda, 70km south of
Kalgoorlie in Western Australia. The acquisition, for a total consideration of A$2.0 million, is now being
incorporated into an updated heap leach feasibility study due for completion in the December Quarter
2014. The study will include updated capital requirements to relocate, refurbish and recommission the
plant at Castle Hill, updated operating costs based on historic data and metallurgical testwork and
redesigned heap leach pads to integrate with the circuit.
The initial study, part of the DFS completed in February 2014, produced 25,000-30,000oz of gold per
annum delivering a net cash contribution to the business of A$10 - $12 million per annum at a
A$1,350/oz gold price over an initial 4 year period. Key operating parameters are summarised below:
Heap leach development and operations
JORC 12 Mineral Resources (Measured and Indicated)
Tonnes (at 0.4g/t cut-off)
Tonne
48,890,000
Grade
g/t Au
0.60
Contained gold
Ounces
896,000
Tonnes (at 0.4g/t cut-off)
Tonne
14,960,000
Grade
g/t Au
0.58
Contained gold
Ounces
280,450
Tonne
8,236,000
Ore heaped at new installation Castle Hill per annum
Tonnes
2,000,000
Gold grade
g/t Au
0.58
%
70
Ounces
26,106
JORC 12 Ore Reserves (Proven and Probable)
Initial mining inventory over initial 4 years
Ore stockpiled from operations at Castle Hill
Initial heap leach summary per annum
Recovery
Recovered gold
Table 3 – Phoenix heap leach physicals summary
6
7
Page 6 of 9
As announced on 21 February 2014
For a detailed summary of agreements in place with Norton, please refer to the Solicitor’s Report within the Prospectus dated 20 October
2010.
16th October 2014
About Phoenix
Phoenix Gold Ltd is an emerging Australian exploration and development company with an extensive land
holding on the Zuleika and Kunanalling shear zones northwest of Kalgoorlie in Western Australia, home to
some of Australia’s richest gold deposits.
Kalgoorlie-based Phoenix is aiming to significantly grow its JORC-classified resources, complete a definitive
feasibility study on core projects and to self- fund aggressive exploration through the development of
advanced mining projects that can deliver cash flow in the short term.
The 100% owned Castle Hill gold project is emerging as a flagship asset with the potential to become a
multi-million ounce gold mine with excellent metallurgy and close to all major infrastructure. Castle Hill is
one of many well-endowed gold systems within Phoenix’s portfolio.
With a balanced mix of exploration (new discoveries and extensions) and development of a sustainable
production profile, Phoenix aims to grow a significant gold company for the benefit of all stakeholders.
Table 1: Phoenix Gold – Summary of Mineral Resources
Project (Mill Feed)
Measured Mineral Resource
Mt
Au (g/t)
Au Oz
Indicated Mineral Resource
Inferred Mineral Resource
Total Mineral Resource
Mt
Au(g/t)
Au oz
Mt
Au (g/t)
Au Oz
Mt
Au (g/t)
Au Oz
18.09
1.5
894,000
7.64
1.3
317,000
25.73
1.5
1,211,000
2.38
1.5
116,000
3.17
1.6
167,000
5.55
1.6
283,000
0.15
3.1
15,000
0.67
1.9
40,000
1.00
2.3
75,000
2.46
2.0
155,000
2.02
1.6
107,000
4.48
1.8
262,000
0.13
2.9
12,000
2.16
2.3
158,000
2.29
2.3
170,000
1.33
1.6
69,000
4.40
1.7
242,000
6.14
1.7
343,000
Ora Banda
3.11
1.9
187,000
3.52
1.9
210,000
6.63
1.9
397,000
Carbine
1.70
1.6
86,000
0.21
2.1
14,000
1.91
1.6
100,000
Zuleika North
0.51
2.5
41,000
0.27
2.5
22,000
0.78
2.5
63,000
29.86
1.6
1,575,000
24.06
1.7
1,277,000
54.51
1.7
2,904,000
Castle Hill (Stage 1 - Mill)
Kintore (Castle Hill Stage 2)
Castle Hill Stage 3
0.18
3.5
20,000
Red Dam
Broads Dam
Kunanalling
Total
Project (Heap leach feed)
0.41
0.59
2.4
2.7
32,000
52,000
Measured Mineral Resource
Resource
Total Mineral Resource
Au oz
Mt
Au (g/t)
Au Oz
Mt
Au (g/t)
Au Oz
Castle Hill (Stage 1 - HL)
21.54
0.6
400,000
15.07
0.6
273,000
36.61
0.6
673,000
Kintore (Castle Hill Stage 2)
3.03
0.6
55,000
9.05
0.6
161,000
12.08
0.6
216,000
Stockpiles
0.20
1.1
7,000
0.20
1.1
7,000
Total
24.77
0.6
462,000
24.12
0.6
434,000
48.89
0.6
896,000
54.63
1.2
2,037,000
48.18
1.1
1,711,000
103.40
1.1
3,800,000
2.7
Au Oz
Inferred Mineral
Au(g/t)
0.59
Au (g/t)
Indicated Mineral Resource
Mt
Total FEB 2014
Mt
52,000
Visit us at www.phoenixgold.com.au
For further information please contact
Investors
Media
Jon Price, Managing Director - PXG
(08) 90 212 704
Fiona Meiklejohn
FTI Consulting
[email protected]
(08) 9485 8888 or 0415 660 076
Page 7 of 9
16th October 2014
Qualification Statements
The information in this report that relates to Ore Reserves relating to Castle Hill is based on information
compiled by Mr Glenn Turnbull who is a Fellow of the Institute of Material, Minerals and Mining. Mr
Glenn Turnbull is a full time employee of Golder Associates Ltd and has sufficient experience which is
relevant to the engineering and economics of the types of deposits which are covered in this report and to
the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the
‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Glenn
Turnbull consents to the inclusion in this report of matters based on his information in the form and
context in which it appears.
The information in this report that relates to Ore Reserves other than Castle Hill is based on information
compiled by Mr William Nene who is a member of The Australian Institute of Mining and Metallurgy. Mr
William Nene is a full time employee of Goldfields Mining Services Pty Ltd and has sufficient experience
which is relevant to the engineering and economics of the types of deposits which are covered in this
report and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004
edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
William Nene consents to the inclusion in this report of matters based on his information in the form and
context in which it appears.
The information in this report that relates to Mineral Resource Estimation for Castle Hill Stage 1 and Red
Dam is based on information compiled by Mr Brian Fitzpatrick, Senior Consulting Geologist for Cube
Consulting. Mr Fitzpatrick is a Member of the Australasian Institute of Mining and Metallurgy and is also
an accredited Chartered Professional Geologist. Mr Fitzpatrick has sufficient experience which is relevant
to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
resources and Ore Reserves” (JORC Code). Mr Fitzpatrick consents to the inclusion in this report of the
matters based on their information in the form and context in which it appears.
The information in this report that relates to Exploration Results and other Resources are based on
information compiled by Ian Copeland who is an employee of the company and fairly represent this
information. Mr Copeland is a Member of the Australasian Institute of Mining and Metallurgy. Mr
Copeland have sufficient experience of relevance to the styles of mineralisation and the types of deposits
under consideration, and the activities undertaken, to qualify as Competent Persons as defined in the
2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Mr Copeland consents to inclusion in this report of the
matters based on information in the form and context in which it appears.
Page 8 of 9
16th October 2014
Forward Looking Statements
This release contains forward-looking statements. Wherever possible, words such as "intends", "expects”,
“scheduled", "estimates", "anticipates", "believes", and similar expressions or statements that certain
actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, have
been used to identify these forward-looking statements. Although the forward-looking statements
contained in this release reflect management's current beliefs based upon information currently available
to management and based upon what management believes to be reasonable assumptions, The Company
cannot be certain that actual results will be consistent with these forward-looking statements. A number
of factors could cause events and achievements to differ materially from the results expressed or implied
in the forward-looking statements. These factors should be considered carefully and prospective investors
should not place undue reliance on the forward-looking statements. Forward- looking statements
necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause
the Company's actual results, events, prospects and opportunities to differ materially from those
expressed or implied by such forward-looking statements.
Although the Company has attempted to identify important risks and factors that could cause actual
actions, events or results to differ materially from those described in forward-looking statements, there
may be other factors and risks that cause actions, events or results not to be anticipated, estimated or
intended, including those risk factors discussed in the Company's public filings. There can be no assurance
that the forward-looking statements will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. Accordingly, prospective investors should not
place undue reliance on forward-looking statements.
Any forward-looking statements are made as of the date of this release, and the Company assumes no
obligation to update or revise them to reflect new events or circumstances, unless otherwise required by
law. This release may contain certain forward looking statements and projections regarding: estimated
resources and reserves; planned production and operating costs profiles; planned capital requirements;
and planned strategies and corporate objectives.
Such forward looking statements/projections are estimates for discussion purposes only and should not
be relied upon. They are not guarantees of future performance and involve known and unknown risks,
uncertainties and other factors many of which are beyond the control of the Company. The forward
looking statements/projections are inherently uncertain and may therefore differ materially from results
ultimately achieved. The Company does not make any representations and provides no warranties
concerning the accuracy
Page 9 of 9