Shares in GGG Resources (LON:GGG) were lifted by the results from the latest 29 holes of the on-going resource drilling at the Bullabulling project in Western Australia.
All of the holes encountered gold mineralisation and the best results featured 18 metres grading 4.37 grams per tonne (g/t) gold from a depth of 53 metres. Other notable results included 4 and 5 metre intersections grading 3.3 and 8.2 g/t respectively.
GGG stock rose in reaction and was trading up 3.5 percent in morning deals at 29 pence.
The company is working alongside its joint venture partner Auzex Resources (ASX:AZX) to develop the 2 million ounce gold project, which is found on the site of a historic gold mine in the Coolgardie Goldfields.
So far 87 of the 88 holes drilled to date have shown mineralisation consistent with the current JORC resource model. Importantly 22 percent of the recently drilled mineralisation extends beyond the bounds of the current JORC resource.
GGG said it is on track to report an updated JORC resource model in the second quarter of 2011.
Northland Capital commented on the statement in its ‘Morning Report’, saying: “This looks like very positive progress for the gold explorer.”
“The company looks to us to be trading at around $65/oz for its share of the current JORC estimate. The current programme suggests there may be material upside to this target. While it too early to estimate the extent we could see scope for outperformance for the shares,” the broker added.
GGG has now commissioned a further 7 kilometres of new drilling in order to infill the new mineralisation found outside of the historically drilled areas. If the results are consistent with the rest of the deposit, GGG expects to include these zones in the new resource estimate to an Indicated Resource category.”
Additionally GGG also told investors that early stage metallurgical work has shown the Bullabulling mineralisation to be ‘softer’ than expected - something that could enhance the project’s economics by lowering mining and crushing costs.