Classic Minerals Limited (ASX:CLZ) has substantially upgraded its Lady Ada Mineral Resource Estimate at the Forrestania Gold Project (FGP) in Western Australia.

Contained gold ounces for the deposit have increased 71% to 1.35 million tonnes grading 1.38 g/t gold for 59,700 ounces.

Classic holds 80% of the gold rights for the FGP, which also includes the unmined Lady Magdalene resource of more than 5.9 million tonnes grading 1.32 g/t gold for 251,350 ounces, just one kilometre north of Lady Ada and located in the same geological rock sequences.

With the recent update to the Lady Magdalene mineral resource, the FGP now comprises existing resources of nearly 7.3 million tonnes at 1.33 g/t for 311,050 ounces of gold.

Resources are located beneath an existing open pit shell at Lady Ada and the unmined, near-surface deposits at Lady Magdalene.

Potential for Classic to transition to producer

The project presents an opportunity for near term mining operations and production.

The current mineral resources are reported in compliance with the JORC Code (2012) and are estimated with a lower cut-off grade of 0.5g/t gold.

When a higher cut-off is applied (1g/t gold), it is possible to delineate higher-grade pockets of the mineral resources, particularly at Lady Ada, which was previously mined at an average grade of 8.8 g/t gold.

Classic continues to focus on delineating these higher-grade zones at both deposits, to potentially generate early cash-flow and support the costs associated with mining, haulage and toll treatment.

At a block cut-off grade of 1 g/t gold, the Lady Ada resource is estimated to contain combined Indicated and Inferred resource of 590,750 tonnes grading 2.17g/t gold for 41,200 ounces and at a block cut-off grade of 2 g/t, the Lady Ada resource estimate produces 218,300 tonnes grading 3.56g/t gold for 24,950 ounces.

Classic will undertake a review of the updated mineral resource and related technical data with a view to completing an update Scoping Study on the FGP.

Management is hopeful that plans for a joint venture to mine and process ore will be finalised in the first half of 2020, a development that could be a significant share price catalyst.

Narrower drill spacings could delineate higher grade mineralisation

Gold mineralisation at Lady Magdalene is hosted within a sheared mafic suite.

The mineralisation is about a kilometre long and is drilled to a down-dip length of up to 400 metres (240 metres vertical depth), generally over 3 to 5 metre thick, with grades ranging between 1 and 5 g/t gold, peaking at 31.1g/t gold over 1 metre.

The recent drilling by Classic and resource estimation work for Lady Magdalene appears to indicate that higher-grade zones may well cross-cut the deposit, but that the current drill spacing (approximately 50 metres north x 25 metres east) is probably too wide to allow delineation of these shoots in any continuous detail at this stage.

Historical diamond drill hole FWRD011 contained an intersection of 7 metres at 9.1 g/t gold, with visible gold less than 25 metres from the natural surface and alludes to these, higher-grade, cross-cutting, sheared intersections being present in the ore system at Lady Magdalene.

Overall though, Lady Magdalene presents occasional, discontinuous high-grade gold zones and hence, is considered a high-tonnage, low-grade gold system.

There is scope for significantly increasing the mineral resources at Lady Magdalene further, mostly by drilling down-dip extensions, but management noted that there is also poor definition of the known, narrow, higher-grade intersections, closer to the surface.

A large program of infill RC resource definition drilling combined with selected diamond drilling could address this issue as it may provide a better understanding of the orientation of gold mineralisation in these interpreted higher grade zones.

Capture of a detailed topographic image across the project area will also support future exploration efforts, while also providing an accurate reference which the historic collars can be related to.

Further share price catalysts in 2020

These ongoing activities are likely to represent numerous share price catalysts in 2020, but the real takeaway following the resource upgrade is that Classic has a value accretive asset with early stage production opportunities.

The deposits have proven to have high gravity gold recoveries with free-milling gold and are of a non-refractory ore style.

Importantly, existing mineral resources are potentially amenable to conventional open pit mining.

Classic can minimise capital costs by entering into JV mining and treatment contracts, and developments on this front would also be well received by investors.

The scoping study will also be an important milestone for the company as it will provide an insight into the commercial viability of the project, as well as the potential returns on capital invested.