Western Australian based gold project developer, Millennium Minerals (ASX: MOY) has received a shot in the arm today with drill results received from an RC drilling programme at its Nullagine Gold Project, in the East Pilbara District of Western Australia.
Multiple gold zones were intersected outside and adjacent to both the current Golden Eagle and Shearers proposed pits.
The primary objective of this round of drilling is to convert Mineral Resources to Ore Reserve status to increase confidence levels from the current 80% of resources in the Measured and Indicated categories.
To date, Millennium has defined a 1.15 million ounce JORC compliant gold resource contained within 7 deposits on granted mining leases at the Nullagine Gold Project. Of the total Resource of 28.86 million tonnes, 80% or 23.24 million tonnes fall into the Measured and Indicated categoriesHowever,additional exploration is likely to see this increase.
The largest deposit is Golden Eagle located approximately 10 km south of the township of Nullagine and contains 68% of the total Mineral Resource inventory.
Most of the permitting and design work for a 1 million tonne per annum Carbon‐In‐Leach (CIL) processing facility has been completed. This should provide Millennium prospects for an early start to development when financing is completed.
The drilling programme was also looking for extensions to mineralisation outside the margins of the current proposed pit designs at Golden Eagle and Shearers targeting Inferred Mineral Resources outside of the current proposed pits.
Some significant gold intercepts at Golden Eagle included:
- 8 metres at 5.08 g/t Au from 22 metres, including 1 metre at 35 g/t;
- 13 metres at 1.26 g/t Au from 14 metres, including 2 metres at 2.37 g/t;
- 10 metres at 1.01 g/t Au from 92 metres;
- 4 metres at 2.73 g/t from 83 metres, including 2 metres at 4.78 g/t
At Golden Eagle, additional gold intercepts confirm strong mineralisation 200 metres along strike to the south west ogf the proposed Golden Eagle pit design, and this area is still open to the north and west.
Significantly, it is likely that Measured and Indicated mineral resources will be defined in this area, leading to an extension of the proposed pit, as well as lifting contained gold ounces.
While at Shearers, best intercepts included:
- 28 metres at 1.09 g/t Au from 30 metres including 4 metres at 2.24 g/t;
- 10 metres at 1.34 g/t Au from 5 metres, including 4 metres at 2.29 g/t Au from 5 metres;
- 10 metres at 1.73 g/t Au from 72 metres, including 1 metre at 5.19 g/t;
- 17 metres at 1.49 g/t Au from 91 metres including 4 metres at 2.3 g/t.
A programme of 10,540 metres of RC drilling has been completed, comprising 6,531 metres at Golden Eagle, 2,681 metres at Shearers and 1,328 metres at Otways. There are still over 3,368 assays remain outstanding for Golden Eagle, Shearers and Otways, providing additional news flow.
In the Bankable Feasibility Study, a conservative base spot price of only A$1175/0z was used, compared to a current spot price of A$1500/oz. This would boost project returns on re-modelling, and in tandem with current results indicate an even more robust base case for development of Nullagine.
Tellingly, the company is engaged with a number of financial institutions in respect of project finance relating to funding development of the Nullagine Gold Project.
With requisited financing, first gold could be poured as early as Q1 2011 – Q2 2011, given infrastructure and services and approvals are largely in place. Then, the longer term plan is to expand expand production to 100koz pa.
On this trajectory, valuations for MOY appear conservative relative to its peers.