Reed Resources takes step closer to gold production at Meekatharra

Reed Resources takes step closer to gold production at Meekatharra
Friday, March 11, 2011
Reed Resources (ASX: RDR) has re-estimated the Mineral Resource at the Jack Ryan and Callisto deposits at the recently acquired 2.5 million gold ounce Meekatharra Gold Project, as part of a strategy to resume mining operations.

The new estimates for the deposits in the Reedy area, at the southern end of Meekatharra Golf Project, support Reed's ‘grade focussed’ strategy to optimise the resources at the historical mining centres using current economic and operational costs.

The re-estimation of Resources at Jack Ryan boosts the overall grade by 34% and the completion of the Resource estimate at the Callisto Project represents the first since mining ceased in 1997.

Christopher Reed, managing director, said “although these two resources represent the smaller deposits that we are re-evaluating, they illustrate the opportunities that arise when the focus is grade rather than bulk tonnes. We expect further good results as we continue the re-evaluation process over the coming months.”

Re-interpretations at the Rand, Prohibition, Surprise and Vivian-Consols deposits are in progress and re-optimisation of Reserves at Bluebird at current gold prices is underway.

Key consultants have been engaged to assist with the re-starting of the Meekatharra project in Western Australia.

The higher grade at the Jack Ryan deposit increases its potential economic viability. Although, overall, there has been a reduction in total gold ounces of 4%, those ounces are contained within 39% less tonnes.

The company anticipates that an additional 10 strategically placed drill holes into the Jack Ryan mineralised system "will result in conversion of a significant proportion of the Inferred Mineral Resource to the Indicated category, and allow a Reserve calculation to be made for expansion of the existing open pit shell."

The first Resource Estimate at Callisto indicates a high grade plunge component to the mineralisation. "Although this represents a small part of the ore-forming system, it is an integral link in the area for targeting additional resources along the Jack Ryan trend," the company said.

On February 24 Reed announced a A$40 million capital raising, with the majority of funds to be applied to the Meekatharra Gold Project acquisition.

The $30 million placement portion of the capital raising was heavily oversubscribed, with a $10 million underwritten SPP, both offered at $0.58.