It's been a bountiful year of drilling for explorer Mega Precious Metals (TSXV: MGP) at its wholly-owned Monument Bay project 340 km due southeast of Thompson, Manitoba. The company was hoping an in-fill drill campaign on its potential pit shell might unearth more high-grade ounces closer to surface, and the strategy paid dividends on Oct. 8 when Mega unveiled an updated resource estimate.

The main gold and tungsten mineralization at Monument Bay is centered on a felsic to intermediate feldspar and locally quartz porphyritic dyke, which strikes sub-parallel to surrounding volcanic and sedimentary rocks. The dyke is strongly spatially associated with the mineralization and structurally behaves as a very competent rock relative to the surrounding volcanics and sediments and is typically brecciated with quartz vein fill containing both gold and tungsten.

Mega's updated resource utilizes more conservative parametres compared to previous reports, including: a 20% reduction in gold price to US$1,092 per oz.; a 4.7% drop in recoveries to roughly 90%; and a 20% jump in in-pit constrained costs. The end result is an estimate with lower overall in-situ ounce, but materially higher average grades.

The adjustments have resulted in a 25% decrease in overall measured-and-indicated ounces and a 50% increase in pit-constrained inferred ounces. More importantly, however; the in-pit measured-and-indicated grade has improved by 9%, while the inferred grade has increased by 27%.

“All the drilling we've been doing over the past year has really been concentrated on bringing higher grades right up to surface. In particular, the central part and western ends of the deposit have combined to help us do it. That really helped with the pit dynamics and the early-stage engineering,” explained president and CEO Glen Kuntz during a conference call. "[We] believe that the current resource and the significant potential to further grow resources confirm the emergence of a high grade gold and tungsten camp at Monument Bay."

The updated resource features around 13,500 metres of drilling complete through the end of August, and boosts Monument Bay's global measured-and-indicated resources to 48 million tonnes grading 1.43 grams gold for 2.2 million contained oz. Inferred resources tack on 29.5 million tonnes of 0.99 gram gold for 1 million contained oz.

The bulk of the gold is centred on the main Twin Lakes deposit, which also accounts for the tungsten by-product credits at the project. Twin Lakes hosts an indicated resource grading 1.5 million tonnes of 1.67 grams gold and 0.17% WO3. Another upside for Mega is the delineation of a higher-grade starter pit that holds 1.1 million oz. grading 2.9 grams gold and 86,000 tonnes of WO3.

“We also have a better handle on the controls of the high grade, and we can get really continuous core that starts right at surface. Overall compared to our resource last year we've tightened up our measured and indicated, and had impacts from things like gold price, operating costs, and recoveries. Our in-fill drilling has had a very positive effect, and you see that through the rising grade,” Kuntz added.

Mega is aiming to publish a preliminary economic assessment (PEA) that incorporates new data at Monument Bay in the first half of 2015. The company has been working on its metallurgical studies in an effort to incorporate the tungsten credits into its model, and released an update on that work in early October.

Recent test results suggest an overall gold recovery of 90.3% using "conventional milling", which includes recovery from a bulk sulphide concentrate, extraction in pressure-oxidation leaching (POX), and recovery of gold in a carbon-in-pulp circuit.

Two options are being considered for the tungsten. The first involves recovery from bulk sulphide flotation tailings by scheelite rougher flotation with cleaner flotation and acid leaching to upgrade the final concentrate to 65% WO3 grade. An alternative scenario contemplates the production of a lower grade (30% WO3) concentrate without acid leaching of impurities, followed by hydrometallurgical processing of the concentrate to produce ammonium paratungstate.

“We've put together two circuits basically. One is the gold-only circuit, while the second focuses on areas where we'd like to recover the tungsten,” Kuntz explains. “In that regard we're looking at whether we'd be doing a higher-grade concentrate for sale or a lower-grade option we'd up upgrading. One thing that's very important is that our ore body is extremely carbonate right, which is very useful. Basically it neutralizes all of our tailings so we are not acid generating.”

Mega is also chasing upside on Monument Bay's greater 340 sq. km property package. The company has completed a variety of geophysical surveys to outline additional areas of structural interest, and is completing a lithological drilling. There remains additional blue sky around the project's AZ and Mid-East zones, which host smaller resources that remain open.

“Some of the new geophysical data we've been collecting and modelling is indicative that the Twin Lake shear zone is sheared lens of a fairly large-scale fold. There's potential we have basically a mirror image or similar system around one km to the south. We have some strong tungsten intersections to the east, as well as some visible gold. We have around 100 km of structure with a lot of potential that has yet to be explored,” noted senior project geologist Ryus St. Pierre.

Mega has traded within a 52-week window of 7¢ and 24¢, and jumped 7% on the Monument Bay resource update en route to an 8.5¢ close at the time of writing. The company reported cash and equivalents of US$1.5 million at the end of June, and maintains 173.2 million shares outstanding for a $13.9 million press time market capitalization.

• [Editor:Mango]