Peel Mining Limited (ASX:PEX) Announce 48% Jump in Apollo Hill Gold Resource to 505,000oz

Perth, Sep 9, 2011 AEST (ABN Newswire) - Perth-based explorer Peel Mining Limited (ASX:PEX) is pleased to report a 48 per cent increase in the resource estimate for its Apollo Hill Gold Project, located 50km south-east of Leonora in Western Australia, to 505,000 ounces of contained gold.
The updated resource estimate - which was estimated by Hellman and Schofield Pty Ltd (H&S) and incorporates the results of a programme of RC and diamond drilling undertaken by Peel - totals 17.2 million tonnes at 0.9 g/t Au for 505,000oz of gold (using a 0.5 g/t gold cut-off) across two deposits.

This represents a 48 per cent increase in contained ounces from the previous December 2010 resource estimate.

The updated resource estimate highlights the potential of the Apollo Hill Project for future economic extraction. Planning of additional exploration is advanced, with a preliminary in-house scoping study to commence shortly. Further work will be aimed at obtaining a better understanding of the controls/vectors for mineralisation at Apollo Hill, as well as generating new regional exploration targets.

Apollo Hill, 100%-owned by Peel Mining, is located about 50 kilometres south-east of Leonora and comprises a package of mineral tenements covering an area of about 360 km2 within the highly mineralised North-Eastern Goldfields of Western Australia.

Resource Estimation Summary

The Apollo Hill Project comprises two deposits, the main Apollo Hill deposit in the north of the project area, and the smaller Ra deposit in the south. Gold mineralisation at the project is associated with quartz veins and carbonate-pyrite alteration along a north-east dipping contact between felsic rocks to the west, and mafic dominated rocks to the east. The combined mineralised zones extend over a strike length of about 1.4 kilometres, and have been intersected by drilling to a maximum depth of about 350 metres below surface.

Within the area covered by the current model, the study database contains 136 aircore, 214 reverse circulation (RC), and 59 diamond holes for 26,761 metres of drilling. An additional 135 RAB holes in this area were not included in the resource dataset. Peel's RC and diamond drilling provides approximately 18 per cent of the mineralised composites used for resource estimation.

Mineralised domains used for the current estimates were interpreted by H&S. Outlines capturing zones of continuous mineralisation with composited gold grades above approximately 0.1 g/t were digitised on cross sections aligned with the drilling traverses and linked to form closed three dimensional wireframes. In addition to the mineralised domain, the current estimates include a background domain which contains only rare, isolated mineralised drill results.

Peel Mining supplied H&S with a set of strings representing the interpreted base of oxidation and top of fresh rock. Triangulations produced from these strings were used define the oxidation subdomains used for the current estimates.

Peel Mining completed a total of 52 immersion density measurements from samples obtained from diamond core drilling. These spatially clustered samples are of uncertain representivity. The current estimates assume densities specified by Peel and range from 1.8 t/bcm for oxidised Ra mineralisation to 2.8 t/bcm for fresh mafic Apollo Hill mineralisation.

H&S estimated the resources for the Apollo Hill Project by Multiple Indicator Kriging, with block support correction to reflect likely open pit mining selectivity, a method that has been demonstrated to provide reliable estimates of gold resources recoverable by open pit mining for a wide range of mineralisation styles. Although the model estimates extend to around 290 metres depth, the reported resources only include estimates to about 180 metres below surface to reflect realistic extraction depths.

Peel Mining believes that the shallow and extensive nature of mineralisation at the Apollo Hill gold project suggests that the project has reasonable prospects for eventual economic extraction.

Apollo Hill deposit details

At Apollo Hill, two zones of mineralisation have been identified: West (or Main) Zone and the East Zone. The current resource extends for about 1,100m in strike.

The gold mineralisation dips to the north-east at 45-60 degrees and is accompanied by quartz veins and carbonate-pyrite alteration associated with a structurally deformed mafic-felsic lithological contact. Mineralisation is present at surface.

The Apollo Hill mineralisation has been tested generally by 30 metre spaced, 45 degrees trending traverses of drill holes generally inclined towards the south-west. Across strike spacing is variable. For most traverses, the upper approximately 50 metres has been tested by holes spaced at around 20-30 metres. Below this depth the coverage is variable, ranging from around 20 metre spacing on some sections to commonly greater than 60 metres.

The western mineralised domain has an average width of about 100 metres while the eastern domain has an average width of about 170 metres.

Metallurgical testwork by Peel Mining has been favourable showing gold extraction levels of more than 80% by gravity separation alone and greater than 98% of gold extractable via gravity and cyanidation.

Ra deposit details

The Ra gold deposit is covered by a layer of transported material, with mineralisation hosted by dolerite rock and dipping 30-60 degrees to the east. The current resource at Ra has a strike length of about 300m, with mineralisation open along strike and at depth.

Ra deposit mineralisation has been tested by generally 20 metre spaced, 45 degree trending traverses of drill holes inclined towards the south-west. Across strike spacing is generally around 15 metres to a depth of approximately 60 metres below surface. Below this depth, sampling is limited to rare, broadly and irregularly spaced drill holes.

For the complete Peel Mining announcement including figures and tables, please view:
http://media.abnnewswire.net/media/en/docs/ASX-PEX-556524.pdf

Contact

Peel Mining Limited T: +61-8-9382-3955 F: +61-8-9388-1025 E: info@peelex.com.au WWW: www.peelex.com.au