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GGG Resources (LON:GGG, ASX:GGB) this morning revealed a 30 per cent increase gold resources at the Bullabulling project in Western Australia.
Today’s resource follows a successful drill programme that found new zones of mineralisation, as a result of in-fill drilling along the Bullabulling trend.
The project is now estimated to contain 3.2 million ounces of gold, with 102 million tonnes of ore grading 0.96 grams per tonne gold.
Total resources increased by 800,000 ounces. At the same time 1.4 million ounces have been upgraded to the indicated resource category from the inferred.
Bullabulling now has 2.1 million ounces of indicated gold resources.
Today’s upgraded resource doesn’t include mineralisation at two areas of Bullabulling, Gibraltar Pit and the Laterite Dumps. The previous estimate did. Drilling is still ongoing at the Gibraltar Pit.
"The Bullabulling Project continues to grow and now stands at 3.2Moz excluding the resource at Gibraltar, which we are currently drilling,” said managing director Jeff Malaihollo.
“The average grades in individual block models have increased, however there are significant new areas of gold mineralisation discovered at average grades of 0.7-0.9 g/t Au, which lowers the average grades in the global resource.
“These new areas of mineralisation should reduce the strip ratios and should have a positive influence on the operating cost estimates.
“This new resource will be the basis of the pre-feasibility study and, combined with the imminent merger between GGG Resources plc and Auzex Limited, places the project in a strong position for development."
GGG says the new resource estimate will be used as the basis for establishing a maiden reserve for Bullabulling during the pre-feasibility study currently in progress.
The scoping study demonstrated a 10 year mining operation with an initial life of mine production of 2 to 2.5 million ounces of gold.
GGG is set to merge with its Bullabulling joint venture partner Auzex Resources (ASX:AZX).
The new company, which will be dual listed in London and Australia, will begin trading next month.
Broker Westhouse said it had retained its 'strong buy' recommendation and increased the target price marginally to 55 pence for the stock.
"The increase in our target price is tempered by the initial scoping study at Bullabulling which indicated start-up capex of $366m and cash costs of $968/oz. The company is currently working on the PFS and is looking to reduce both capex and cash costs," it said in a note.
As at 2pm, GGG shares were trading up 12.07 per cent, to change hands at 16.25 pence each.
GGG Resources upgrades Bullabulling gold resource to 3.2 mln ounce - UPDATEFebruary 29 2012, 2:05pm
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