Crocodile proves up Pine Creek (October 25, 2010)

Crocodile Gold (CRK-T) continues to show the gold potential of Australia’s Northern Territory.

The recently pronounced gold producer updated its resource estimate on the Pine Creek project, which sits just 15 km from its operating Union Reefs mill.

Infill drilling at Pine Creek managed to boost indicated resources by 315% to 288,600 oz. gold from 69,600 oz.

While the company’s shares fell by 2% or 3¢ to $1.50 in Toronto on Oct. 14 — the day the estimate news was released — they had been on a noteworthy run since the start of October. In that time Crocodile shares have gained roughly 35% or 39¢.

The company says the latest results show the potential of Pine Creek to contribute to production at the Union Reefs mill by early next year at minimal capital requirements.

Considering that the company is currently trucking ore from deposits in the Burnside area, which is 80 km from the mill, the addition of Pine Creek’s ore to the Union Reefs circuit could actually lower overall production costs for the company.

To make that scenario a reality the company has fast tracked exploration, as well as environmental and mine engineering studies.

What’s more, Crocodile says there is still significant exploration upside since drilling to date hasn’t gone deeper than 100 metres.

Pine Creek’s resource estimate is made up of eight deposits with the bulk of the indicated resource coming from the International deposit, which has 2.3 million tonnes grading 1.4 grams gold per tonne for 105,000 oz.

The company says it will update reserves at Pine Creek shortly and plans to have a resource estimate out soon on an area adjacent to the Union Reefs mill as well.

Historically, Pine Creek has produced over 750,000 oz. gold from six open pits and some underground workings.

Global resources for Crocodile stand at 47.5 million tonnes of 2.2 grams gold for 3.31 million oz. gold in the measured and indicated categories. It has another 25.6 million tonnes of 2.2 grams gold for 1.84 million oz. in the inferred category.

Crocodile began milling ore at Union Reefs in December 2009 and is currently processing ore from its Howley, North Point and Princess Louise open-pit mines and the Brocks Creek underground mine.