Reed Resources completes Meekatharra Gold Project acquisition, to commence drilling in July

Reed Resources (ASX: RDR) will finalise the settlement of the Meekatharra Gold Project acquisition today and is set to shortly commence a reverse circulation (RC) and diamond core drill program.

The Meekatharra project, located in Western Australia, was acquired by Reed in January 2011. The company is paying the final instalment for the project today with A$8 million cash and A$1.3 million worth of Reed shares.

The company is looking to recommence production from its 2.5 million ounce (Moz) Resource at the project in 2012.

Diamond drilling will begin July 12 at the 600,000 oz Mickey Doolan Resource with targets including Chunderloo, Bluebird and Paddys Flat.

Chunderloo is a shear hosted copper-gold-silver prospect located three kilometres west of Reed's Bluebird mill, on the western contact of the belt.
Historical intersections are impressive and include 15 metres at 14.7 grams per tonne (g/t) gold and 4.1% copper (Cu) (including 7 metres of 28.9 g/t gold and 8.3% Cu). Numerous geochemical and geophysical targets have been identified over 1.5 kilometres strike.

The diamond core drilling has been designed to collect geotechnical information from the Prohibition ore body and metallurgical samples of the Mickey Doolan and Macquarie mineralisation.

The RC drilling program is targeting resource extensions at Prohibition, Batavia and Rhens, and also testing extensions to mineralisation at Chunderloo (copper – gold – silver), Sirdar, Rocklea, Whangamata, Paddys Flat and Reedy.

Resource RC drilling will target extensions and areas of the JORC Inferred Resource at Prohibition which stands at 5.4 million tonnes (Mt) at 2.6 g/t gold for 454,000 oz.

Extensions will also be targeted at the Batavia Resource (0.3Mt at 2.4 g/t for 24,000 oz) and the Rhens resource (2.8Mt at 1.6 g/t for 143,000 oz).

The aim of the program is to increase the open pit probable reserves at each of the areas targeted.

The exploration drilling is aimed at progressing a number of brown field targets. Projects range from exploratory drilling beneath shallow historic workings at Rocklea North, to validation drilling and targeting extensions to mineralisation in areas that have been extensively drilled to shallow depths such as Chunderloo.

Drilling around the historical pit at Whangamata is designed to significantly expand the length of the Resource and Reserve.

RC exploration drilling at Paddys Flat is targeting a fold hinge in banded iron formation (BIF) located 600 metres west of the Prohibition BIF.

Paddys Flat has historical gold production of 2.3Moz and a new underground mine is planned. This mineral field continues to deliver results in line with the company's expectations from the due diligence conducted on the project.

Significantly, on June 22 Reed increased the global resource for the Vivian-Consols-Mudlode-Fatts ore system at Paddys Flat from 1.78Mt for 318,000 oz to 1.77Mt for 373,000 oz, that moves it closer to re-commencement strategy to include underground operations.

The re-interpretation of the ore system was completed by Snowden. The upgrade represented a 17% increase in global grade from 5.4g/t to 6.6g/t, which will result in a greater number of ounces for less tonnage.

The RC drilling in the Reedy area will investigate possible depth extensions to mineralisation along the Turn of the Tide and Reedy lines of mineralisation. This will target expansions to the existing pits at Culculli, Thompsons Bore and Turn of the Tide.

With a market capitalisation around $140 million, $31 million in cash and $9 million in debt, the recent upgraded Resource boosts the 2.5Moz at Meekatharra and places Reed on an EV/ounce of under $50, excluding its other lithium and vanadium projects.

Meekatharra Gold project was acquired by Reed for less than $30m and boasts an established 200 man camp, 3Mt per annum mill and other facilities which have a replacement cost of $100 million.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/17563/reed-resources-completes-meekatharra-gold-project-acquisition-to-commence-drilling-in-july-17563.html