Phoenix Gold has entered into a two-year toll milling agreement with FMR Investments for ore treatment at the latter’s Greenfields ore treatment facility in Coolgardie, Western Australia

Under the terms the agreement, a minimum of 600,000t to 800,000t will be treated annually at the processing plant on a quarterly campaign basis without blending of any third party ore.

Ore will be sourced from shallow smaller scale open cut mines located close to the mill, while mining and haulage will be completed under contract at highly competitive rates, prior to start of the ore treatment in September 2014.

According to Phoenix Gold, payment for milling will be based on an open book cost plus structure and a $/t basis.

Phoenix Gold managing director Jon Price said the long-term agreement secures a milling pathway for both the companies for ore mined under the base case development plan.

"Phoenix has treated ore at the Greenfields mill with great success on a number of occasions over the past few years and this next stage will be on a larger scale and longer term basis," Price said.

"With the successful completion of the placement, we are executing on the development plan with grade control and mine extension drilling commenced."

The company has commissioned Drilling Australia to undertake grade control and mine extension drilling, and the results are expected to be released within the next month.

The agreement, which is said to have the potential for additional extensions, will also provide the company with an opportunity to purchase the facility should FMR look to divest the mill during the term of the agreement.

Image: Project location, Phoenix tenements and location of Greenfields Mill. Photo: courtesy of Phoenix Gold Ltd.