Phoenix Gold boosts Eastern Goldfields footprint, eyes more acquisitions along Zuleika shear

Phoenix Gold (ASX: PXG) has reached an agreement to acquire 100% of the Red Dam Gold Project in Western Australia’s Eastern Goldfields from Carbine Resources (ASX: CRB).

Red Dam covers more than 270 hectares in the heart of the Eastern Goldfields, adjacent to Phoenix’s Broads Dam Gold Project on the Zuleika Shear, a major northwest trending lineament and host to numerous multi-million ounce gold deposits.

Carbine Resources has stated that Red Dam contains more than 147,000 ounces of gold at 2.5 grams per tonne (g/t) gold, with the most recent drill program, for infill and extension work, completed in 2007.

The project is highly prospective due to previous intersections such as 5 metres at 44.07g/t gold from 32 metres, 14 metres at 8.27g/t gold from 97 metres and 18 metres at 4.88g/t gold from 76 metres.

The project area is open along strike and at depth.

Phoenix plans to begin a 5,000 metre extensional drilling program at Red Dam in the March quarter of 2012.

Phoenix managing director Jon Price told Proactive Investors today that many existing high grade hits including the 5 metres at 44.07g/t gold are outside of the current 147,000 ounce resource, and this acquisition could be just the beginning for the company.

"We will certainly be looking for new acquisitions in the future along the major shear zone of Zuleika."

The Red Dam acquisition comprises consideration of a $50,000 non-refundable cash deposit on signing the formal agreement, a $50,000 cash payment at settlement, 8 million Phoenix Gold shares (at a deemed price of $0.23) and a gross production royalty of $10 per ounce.

Phoenix and Carbine expect to execute and complete a Formal Sale Agreement by December 2011, subject to any approvals required.

Broads Dam extension
Red Dam is one of a number of strategic acquisitions made by Phoenix in recent times to extend the Broads Dam project.

This strategy is looking to be a success, with the company intersecting more gold at the project in early October.

Highlights from the reverse circulation drilling included 13 metres at 4.85g/t gold from 16 metres, 2 metres at 13.74g/t gold from 105 metres and 2 metres at 9.04g/t gold from 108 metres.

Early cash flow

Phoenix recently secured an agreement with FMR Investments to treat a parcel of ore through FMR’s 1 million tonne per annum Greenfields processing facility near Coolgardie in Western Australia.

This agreement allows Phoenix to realise early cash flow from the surface stockpiles, possibly as early as the December quarter 2011, with minimum haulage required.

Phoenix has around 19,000 ounces in stock piles at various grades which it is looking to begin processing in the December quarter.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/21367/phoenix-gold-boosts-eastern-goldfields-footprint-eyes-more-acquisitions-along-zuleika-shear-21367.html