Westgold Resources Limited (ASX:WGR) continues to advance its Central Murchison Gold Project (“CMGP”) toward production, exploration success and the progression of open-pit mining designs continue to result in increases in the overall Mineral Resource and Mining Reserve estimate.

As previously advised, the CMGP covers the historic goldfields of Big Bell, Cuddingwarra and Day Dawn, which have historic aggregated production of over 5 million ounces of gold. Mining in this area ceased in 2003 when the gold price was under A$500 per ounce. The CMGP still contains significant mineral resources and remnant ores in previously mined open pits, underground mines, residual dumps and newly defined and un-mined gold resources. To date the Mineral Resource estimate is made up of 27 individual gold orebodies and the Total Mineral Resource estimate for all sources, including low grade is 31.4 million tonnes at 2.67 g/t Au containing 2.7 million ounces of gold.

Westgold is completing a Definitive Feasibility Study (“DFS”) aimed at the re-development of this prolific gold producing area. The development strategy is based around a base load of ore sourced from the 2 large underground mines that will be re-started, the Big Bell Mine and the Great Fingall Mine (incorporating also the historic Golden Crown Reef system). These ores will be supplemented with feedstock from historic tailings dumps (1937 to 1955) and open pit ores. The DFS contemplates a new 1.2 million tonne per annum conventional gold processing plant to be constructed at the Big Bell site where a significant amount of infrastructure (offices, borefields, and haulroads) already exists.

Initially the bulk of feedstock will be from tailings and open-pit sources whilst the underground mines build to sustainable capacity (approx. 2 years). The benchmark production profile is considered to average 100,000 ounces of gold per annum, with an initial 8 year mine life and preliminary operating cost estimates in the $700-$800 per ounce range.

Mining Studies for the underground mine component had previously been completed and Westgold has advised of the mineral resource and mining reserve estimates. It has now completed its design and schedules for the initial open-pit mining component and the estimate for low grade tailings feedstock.

Westgold believes at this point it has the Mining Reserve inventory and necessary mining, metallurgical and infrastructure components underway to complete the DFS and justify a development decision with sufficient financial capacity to support a large proportion of debt funding. Westgold awaits the completion of the DFS with the surface infrastructure and processing components being managed by specialist metallurgical and construction engineering group, GR Engineering Services Limited and is due for completion in June 2012.
Westgold is continuing to hold discussions on debt financing for the CMGP with international bankers and financiers and advises that it is close to reaching a satisfactory arrangement for project specific debt that will be subject to completion and confirmation of the DFS outcomes.

Further, Westgold advises that despite having set the parameters to enable the DFS to be concluded, it continues to explore and evaluate additional mining opportunities for development from within its existing inventory of ore bodies and tenements. Westgold believes there remains significant opportunity to further expand the Mineral Resource and Mining Reserve estimate.

In parallel with the planned development of the CMGP, Westgold continues to advance its Rover 1 Project at Tennant Creek in the Northern Territory. This project with a total Mineral Resource inventory of 1.22 million ounces (gold equivalence – refer to previous ASX announcements) is also close to development ready. Westgold is intending to gain approvals for a decline mine access to enable more detailed drilling and sampling of the high grade iron-oxide-copper-gold lode system and the infill drilling of deeper parts of the ore system.