PNX unearths near-surface, high-grade gold at Glencoe

PNX is off to a good start at its Glencoe gold deposit with maiden drilling uncovering new zones of near-surface, high-grade gold which bodes well for the company’s plans to upgrade the resource.

PNX Metals (ASX:PNX) has completed its first drilling program at the recently acquired Glencoe deposit in the Northern Territory which has intersected immediate extensions to near-surface gold.

The 27-hole, 2352m program has thrown up hits of 8m at 1.69 grams per tonne (g/t) gold from 65m, 9m at 2.23g/t from 21m and 3m at 5.37g/t from 31m.

The news propelled shares up over 14% on Tuesday morning to 0.8c.

PNX Metals (ASX:PNX) share price chart

These new intersections have extended the strike length by more than 200m to the southeast of the deposit and current resource.

Mineralisation also appears to be thickening towards the southeast where broader zones of mineralisation containing multiple gold intercepts have been encountered.

And there is still plenty of exploration upside, with mineralisation remaining open in every direction.

“Several high-grade, near-surface intersections were returned, and the strike length has been extended beyond the current MRE [mineral resource estimate],” managing director James Fox said.

“The deposit scale has been increased with this drilling.”

The Glencoe deposit, which is already covered by a granted mining lease, sits in the same structural trend as and less than 3km from PNX’s Fountain Head project in the NT.

This ‘bolt on’ asset has significantly expanded the planned Fountain Head development.

PNX wants to build scale at Fountain Head, which is located within a historic mining area that comes complete with existing haul roads, water, rail, gas, grid power and telecommunications infrastructure.

Fountain Head – which currently has a resource of 2.94 million tonnes at 1.7g/t for 156,000oz of gold — could become a regional processing hub for mineral deposits in the Pine Creek region that are considered “stranded” due to their modest grades and distance from existing infrastructure.

A recent prefeasibility study highlighted a robust, multi-commodity, two-stage mine development that would have an initial mine life of 10 years, a pre-tax net present value (NPV) of $171m and a pre-tax internal rate of return (IRR) of 63 per cent.

Glencoe is one of several gold prospects that could provide additional feed material to the proposed carbon-in-leach plant to extend the mine life and lower costs.

It currently hosts an inferred resource of 2.1 million tonnes at 1.2g/t for 79,000oz of contained gold, which extends from surface to 120m vertical depth, comprises a number of discrete lodes over a strike length of greater than 1.5km, and remains open in all directions.

PNX’s plan is to bring the Fountain Head project into production first, with the near-surface oxide and free-milling gold and silver from the Mt Bonnie, Glencoe and Fountain Head open pits to be processed through a 750,000-tonne-per-annum plant over the first five years.

The Hayes Creek gold-silver-zinc project would then be brought into production in year four. The processing plant has capacity potential of up to 900,000 tonnes per annum

“Glencoe forms an important part of our development plans for the Fountain Head gold and Hayes Creek gold-silver-zinc projects,” Fox said.

“Further drilling will be conducted at Glencoe over the coming months as we look to upgrade the confidence level for a portion of the current deposit to the indicated category.”

PNX plans to undertake a 2000m follow-up drilling program in October.

The program will focus on extending the new gold zones, targeting additional untested anomalies evident from historic exploration and recent surface sampling, and collect further data to upgrade the resource to the indicated category.

This article was developed in collaboration with PNX Metals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.