Kentor Gold has discovered high grade gold at the Murchison project in Western Australia, which is scheduled to commence production in June 2012.
Drilling results found 5m at 102.2gm per tonne (g/t) of gold from 43m, including 1m at 474.5g/t gold; and 17m at 9.6g/t gold from 43m, including 1m at 103g/t gold.
Kentor Gold managing director Simon Milroy said: "The drill results suggest that the Lewis pit may be of significantly higher grade than the current resource model indicates.
"There is the potential to achieve higher gold production and lower cost per ounce than we have currently scheduled and forecast for the initial phase one operation," Milroy said.
The Lewis deposit is located to the west of the extrapolated position of the Burnakura Thrust Zone and to the north of the Reward Pit.
Drilling in the Lewis pit shell involved two diamond drill holes 50m apart within the pit design and at the north of the existing pit where mining was undertaken by the previous owner to a depth of 20m.
The Murchison Gold Project includes the Burnakura gold and Gabanintha gold-copper sites, around 50km south of Meekatharra.
Kentor Gold will start the first phase of the four-phase development programme at Murchison, which is expected to produce 24,000 ounces of gold per year from mid-2012, with expansion planned from next year.
Initial production will come from the Lewis and Reward pits at Burnakura, from a combination of open pit and underground mining.