Aphrodite Gold releases drill results that support resource upgrade at 1m oz gold project

Aphrodite Gold (ASX: AQQ) has upped the ante drilling at the company’s name sake Aphrodite Gold project near Kalgoorlie, delivering impressive intersections like 10 metres at 18.80 grams per tonne (g/t) gold.

Highlights from the latest five infill holes for 1366 metres at the highly prospective Alpha Lode didn't disappoint with four reporting high grade gold mineralisation, and included:

- 31 metres at 7.83g/t gold from 182 metres, including 10 metres at 18.80g/t gold, plus 16 metres at 3.01g/t gold from 236 metres from hole APR1196; and
- 33 metres at 4.53g/t gold from 147 metres, including 4 metres at 15.12g/t gold from 152 metres, plus 11 metres at 2.86g/t gold from 107 metres, plus 14 metres at 1.62g/t gold from 72 metres from hole APR1195.

The most recent results are from holes drilled over a 120 metre strike length along the northern half of the Alpha Lode.

Identifying the vast potential of the Alpha lode, last month infill drilling over a 200 metre area of the southern and central parts returned;

- 15 metres at 5.62g/t gold from 57 metres, including 4 metres at 11.00g/t gold from 64 metres, plus 33 metres at 1.92g/t gold from 160 metres, including 7 metres at 4.61g/t gold in hole APR1191.

The Alpha lode together with the parallel Phi Lode at the Aphrodite Gold project host a JORC Resource of 1.03 million ounces of gold.

The ongoing reverse circulation drilling has delivered multiple zones of strong gold mineralisation over strike lengths that are significant within the Alpha structure, and at potential open pit depths.

This is significant as a Scoping Study should be completed for the Aphrodite Gold Project in second half of 2011, which will look at initial open pit mining of the deposit.

At present there is 357,000 ounces of gold from surface to 150 metres, with mineralisation actually extending to a depth of at least 650 metres below the surface.

The Alpha-Phi Lode system hosts the resources defined so far and represents a north-south system that extends for 3 kilometres along strike.

New zone

There is also a NE striking cross lode called Epsilon that possibly links the Alpha and Phi lodes.

High-grade drill intercepts reported in this zone include 4 metres at 10.71g/t gold, including 1 metre at 27.92g/t gold.

There are also other exploration targets that show enough early promise to deliver additional ounces and add to resource inventory.

Forward program

With current drill results is likely to see a further upward revision of the current 1.03 million ounce JORC Resource during the September quarter 2011.

This includes up to 30,000 metres of drilling to be completed by September, with the focus infill, with further drilling of exploration targets and strike extension to the Alpha-Phi lodes culminating in the Scoping Study.

Detailed metallurgical test work on core samples by leading mineral engineering firm METS is underway.

Metallurgy

All important test work to establish the most effective treatment method is underway. Primary mineralisation is semi-refractory in nature. What is lost on many investors is that refractory gold is not uncommon throughout the Kalgoorlie region.

This includes refractory gold operations operated at nearby KCGM’s Super Pit and Barrick Gold's (NYSE: ABX) Kanowna Belle gold producing operations.

Aphrodite has said that the company's plan has been to toll treat at another plant.

Kanowna Belle is the most logical place to process the ore, Barrick used to own the Aphrodite project.
Historically, it was likely that Barrick may have intended to use the high grade ore from the Alpha lode to supplement lower grades ores from Kanowna Belle and Red Hill.

Preliminary test work on primary ores shows that up to 96.8% of gold can be recovered in concentrate by flotation, with 99% gold extraction following pressure oxidation of concentrate.

Comment

Today's drill results follow June's strong gold results suggesting an increase in JORC Resource in 2011.

Followed by a Scoping Study in second half of 2011 will provide catalysts for re-rating of the Aphrodite Gold share price.

Clearly, there are third party options for Aphrodite Gold with respect to treatment options for ore from the project.

The project is located just 65 kilometres north west of Kalgoorlie, with regional infrastructure and supporting exploration and mining services.

With cash of $4.8 million (31 March 2011) and a market capitalisation of $11 million works out an EV/Resource ounce of less than $7 an ounce.

This compares to an industry average of over $150 an ounce. To say that Aphrodite Gold is undervalued is to state the obvious.

At some stage, perhaps this year, investors will awaken to Aphrodite Gold and current share prices will not be on offer.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/17659/aphrodite-gold-releases-drill-results-that-support-resource-upgrade-at-1m-oz-gold-project-17659.html