Shares in Caspian Holdings (LON:CSH) rose in early trade after the group announced positive initial results from a drilling campaign aimed at appraising extensions of the orebody of the La Parrilla tungsten mine in Spain.
By 10.00 am, the stock was up more than 20 per cent at 0.4751 pence.
Caspian has an option to fully acquire La Parrilla, a former producing open pit mine which closed in the 1980s.
Caspian has drilled three out of five holes in a 1,500 metre diamond core drilling campaign on the property which is targeting an open zone to the west of the existing open pit.
To date, a total of 887.4 metres have been drilled in three vertical holes. The fourth hole is underway.
Assay results have been received for the first hole IP-01 which indicate thick high grade intersections well above the average mine grade of 0.1 per cent WO3 (tungsten trioxide).
All holes drilled to date have intersected visible tungsten mineralisation.
Significant intersections from the first hole include a 16 metre interval with 0.2755 per cent WO3 and 36 metres with 0.3551 per cent.
Executive chairman Michael Masterman said: "We are pleased with the promising results of the drilling programme at La Parrilla, which is testing the western extension of the high grade mineralisation. The results should enable us to commence initial mine development planning and proceed to exercise the acquisition option."
The technical design of the La Parrilla tailings project has now been finalised and approval documents submitted to the mining authorities.
All approvals are expected to be granted by the end of the third quarter 2012.
Annual plant feed will be 330,000 tonnes and annual production is anticipated to be 28,000 metric tonnes tungsten and 26 tonnes tin, which will deliver over €7million per annum in revenue at current tungsten and tin prices.
La Parrilla is situated in the Extremadura region of southwest Spain, approximately 310 kilometres southwest of Madrid. The site is accessed directly from the highway along a 3 kilometre asphalt road and is serviced by electricity and water.
The project comprises a tungsten mine and a tungsten tailings project. The historic mine resource estimated by SRK in 2008 is 36 million tonnes at 0.09 per cent WO3, making it one of the largest tungsten deposits in the western world.
The tailings project is expected to be in production by approximately mid-2013.
The price of tungsten has more than doubled over the last three years.
The La Parrilla tailings deposit and tungsten mine development offer a low cost, high margin resource development opportunity for Caspian.