TORONTO (miningweekly.com) – Gold explorer Premier Gold Mines on Tuesday reported a 69% increase in the compliant indicated resources at its Hardrock project, located on the Trans-Canada property in north-western Ontario.

The Thunderbay, Ontario-based explorer’s TSX-listed stock jumped 9.32%, or C$0.27 apiece, as investors sought positions in the company’s stock, encouraged by the increased resource.

Premier said the undiluted and in-situ estimate was completed by InnovExplo by using a three-dimensional block model, which, with the input from the company's in-house geological personnel, showed total indicated resources of 4.87-million ounces, up 50% from the previous report, and that the overall inferred resources jumped 27% to 2.74-million ounces.

The total ounces included both undergound and openpit resources, and were estimated with cutoff grades of 0.5 g/t gold for the openpit and 3 g/t for the underground projects.

For only the openpit, the indicated ounces now totalled 3.97-million ounces, an increase of 1.62-million ounces, or 69%, with coincident increases in resource grades.

The company said the new estimate used identical grade capping, cutoff grades and gold prices as in the previous estimate, but included 86 500 m of additional infill drilling, for a total of 621 000 m.

"Ongoing drilling and engineering work has provided a better understanding of the characteristics of the Hardrock deposit, resulting once again in the delivery of solid results. This updated mineral resource estimate clearly demonstrates an increase in the quality and quantity of the deposit,” Premier president and CEO Ewan Downie said.

He added that a sensitivity analysis using various cutoff grades conveyed “considerable optionality” at Hardrock, which the company's development team was evaluating to deliver the best feasibility study for shareholders. This included using a lower cutoff grade for the openpit, when compared with the October 2013 resource estimate, which was used to prepare the latest March preliminary economic assessment (PEA).

The PEA modelled a 15-year mine life with gold output of more than three-million ounces mined at a rate of 10 000 t/d during initial mining operations and 18 000 t/d following an expansion in the third year of operations.

The larger in-pit gold resources identified during the preparation of this new resource estimate, however, suggested that production throughput of more than 10 000 t/d and 18 000 t/d might be achievable.

Premier said it was currently evaluating the potential impact that these increased production scenarios would have on mine life and overall gold output as part of the ongoing trade-off analysis, while maintaining preproduction capital expenditure discipline.

The company said it aimed to complete the study during the first half of next year.

Further, Premier noted that it estimated that an additional 35 000 m of diamond drilling would be required this year to convert the remaining openpit inferred ounces to the indicated category, before completing the feasibility study.

Premier’s TSX-listed stock on Tuesday closed at C$3.17 apiece, having gained 89.10% in value since the start of the year.