VANCOUVER (miningweekly.com) – Gold producer Leagold Mining has updated the compliant indicated and measured Bermejal Underground resource by 94% to 1.97-million ounces, the company reported on Monday.

The measured and indicated Bermejal Underground resource, located at the company’s flagship Los Filos operation, in Mexico, comprises 9.9-million tonnes grading 6.2 g/t gold. The latest resource estimate also calculated an inferred resource of 4.8-million tonnes grading 5.4 g/t for 820 000 oz of gold.

The resource estimate was based on 16 holes drilled in 2016 and 46 from the 2017 drill programme, and built on the mineral resource estimates as of December 31, 2016. The majority of the remaining 67 holes planned for the 2017 drill programme are infill and will focus on upgrading additional inferred resources to indicated classification, the company said.

"This updated resource estimate includes a 94% increase in the measured and indicated resources and underscores the magnitude of the oxide mineralisation of the Bermejal Underground deposit. In addition to converting the previously estimated inferred resources of 678 000 oz to mostly indicated resources, the programme has also added 820 000 oz to the new inferred resource estimate.

“The exploration success at Bermejal Underground, which drives this resource update, also supports our development plan to expand Los Filos' gold production rate. The ramp to access the Bermejal Underground deposit recently commenced and has advanced 27 m as of October 13,” CEO Neil Woodyer commented.

The Bermejal Underground deposit has a central portion with a grade of 7.2 g/t and containing approximately 60% of the measured and indicated resources. This high-grade zone ranges from 20 m to 60 m wide. The eastern and western flanks of Bermejal Underground provide extensive areas of mineralisation along the contact of the Bermejal intrusive with surrounding carbonate rocks. These areas have more moderate grades ranging from 4.1 g/t to 5.3 g/t and widths of 3 m to 25 m.

The mineralisation has been drill tested along about 1 600 m along the strike of the intrusive contact and has a vertical depth extent of more than 800 m.

The measured and indicated mineral resources are part of the engineering and mine design work being conducted for Bermejal Underground and will form the basis of the mineral reserves, which the company intends to report in the first quarter of 2018. An updated site-wide technical report, compiled by SRK, will be submitted in the second quarter of 2018, Leagold advised.

Leagold's TSX-listed stock rallied more than 6% on Monday following the news, to hit an intraday high of C$3.45 apiece.