Chaarat Gold (LON:CGH) shares climbed around 6.5 percent in early deals, after it said that positive drilling results support the plan for the newly renamed Kiziltash underground mine in the Kyrgyz Republic.
Kiziltash - formerly known as the Main Project - comprises the ‘Main zone’ and the ‘Contact zone’.
This morning’s drilling results included nine of the last ten holes drilled on the Main zone during 2010. The results indicate that the mineralisation is consolidating and it is thickening at depth.
"Drilling in the Main zone is gradually revealing a larger than expected, more continuous and exciting mineralised system,” chief executive Dekel Golan said.
Golan believes that Kiziltash may support a significant underground mining rate, due to the combination of the Main zone and the large and growing Contact zone.
"These results provide us with further encouragement and confidence for the establishment of a large, low cost mining operation, in addition to the open pit Tulkubash project which we aim to bring into production by early 2012," Golan added.
Last month, Chaarat rationalised the development of the 4 million ounce Chaarat gold project, splitting the project into two separate entities, the larger Kiziltash underground project and the nearer term Tulkubash open-pit.
It is currently working on the Kiziltash pre-feasibility study, which is scheduled for Q1 2011. It is also fast-tracking Tulkubash into production during 2011.
At Kiziltash Chaarat has drilled 10 holes on the Main zone this year, which along with the 196 holes already drilled, has delineated a system with sufficient grades, widths and strike length that Chaarat believes could support a major mining operation.
The 2009 drill programme delineated 1.87 million ounces of gold at the Main Zone, at a grade of 4.15 grams per tonne, and these latest results are expected to extend this further.
The latest drilling highlights showed widths between 6 and 18.4 metres grading 3.55 to 8.21 grams per tonne.
Importantly two of the zones have been identified on strike, spaced 100 metres apart, and Chaarat plans further drilling to test whether they form part of the same ore body. If this is proven the company believes the entire Kiziltash project’s economics will be enhanced.
“The importance of these results goes well beyond their addition to the current 4.009 million ounces JORC compliant resource,” the company said..
“There is now a long strike of relatively wide mineralisation within three areas in the Kiziltash project which supports the company's plan to build a significant underground operation.”