Phoenix Gold: gold treatment grade exceeds expectations, additional cash flow to be generated

Phoenix Gold (ASX: PXG) has recently evolved into a cash flow generating gold explorer, with the company delivering some more good news to the market in that the treatment grade of a recent ore agreement beat expectations by 35% to be 1.65 grams per tonne (g/t).

The ore agreement was with the nearby FMR Investments using ore from Phoenix's nearby Catherwood Mine, using ore stockpiled above ground.

Under the agreement Phoenix delivered an ore parcel to the mill and paid a toll treatment charge on a $A per tonne basis, with the processing circuit configured under the direction of the company's management to enable optimal conditions to achieve maximum recoveries and minimise costs.

Where the story gets even more interesting for Phoenix is that the company will seek to treat the remaining 25,000 tonnes of stockpiled ore in early 2012, which will generate additional cash flows for the company.

Providing another plus to Phoenix besides the cash flow, the treatment of ore also provided valuable metallurgical information, and has confirmed the gold recovery values used in the Catherwood Feasibility Study and project evaluation announced in August 2011.

This study demonstrated robust economics with a mine design producing 313,600 tonnes at 2.6g/t of gold for 27,000 ounces. Catherwood is projected to deliver $15.6 million in free cash flow at a A$1,500 per ounce gold price.


Additional cash flow generating agreements

The FMR agreement follows a deal with Kalgoorlie Mining Company (ASX: KMC) for the treatment of up to 300,000 tonnes per annum of Phoenix ore through the Bullant processing facility, which is forecast to be operational in mid-2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/22865/phoenix-gold-gold-treatment-grade-exceeds-expectations-additional-cash-flow-to-be-generated-22865.html