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Queensland-based junior miner Cannindah Resources has gone into small-scale production at its Piccadilly gold project, with the first consignment of ore processed at Minjar Gold’s Pajingo operation in October.

The ore is being sourced from an area of high-grade quartz veins on the Piccadilly mining lease, 60km north of Charters Towers.

But Cannindah has its eye on a greater prize – a ‘significant’ intrusive system believed to be a feeder for that area of mineralisation.

“The bigger fish for us is the intrusiverelated gold system that’s about 1.5km to the south, which our consulting geologists and external consultants have compared to other larger projects out there like Mt Wright, Mt Leyshon and Kidston,” executive chairman Tom Pickett said.

The company became involved with the project in March after entering an agreement with Piccadilly Gold Mine Holdings which gives it the right to explore and mine ML1442.

It subsequently secured an earn-in agreement to access surrounding ground under exploration permits.

Mr Pickett said the move came after Cannindah Resources had identified gold as a focus, both for continued exploration on its flagship Mt Cannindah project, 100km south of Gladstone, and more generally.

The team carried out work to determine what was feeding the high-grade quartz veins on the Piccadilly mining lease and became very interested in a system within Piccadilly’s EPM ground.

“There were areas peripheral to some parallel high-grade veins that were originally not thought to be carrying any mineralisation and actually turned out to be carrying mineralisation,” Mr Pickett said.

“That tended to provide a little more confidence to pursue what might be feeding the system within the mining lease, so we have started to concentrate our efforts on the possibility of a much larger system that is just to the south.”

He described Piccadilly as exploration rather than a mining project at the moment, but there are obvious advantages to having immediate access to ore on the mining lease that is of sufficient grade and quantity to process.

Minjar Gold reached an ore purchase agreement with Cannindah Resources in September and the first haulage of Piccadilly ore to its Pajingo plant occurred in October.

Mr Pickett said the team was investigating 135m of strike on the mining lease at the moment, of a potential 1.2km anomaly.

“That is just within the mining lease. That does not include what we are looking at in the exploration ground, which is in and of itself a potentially 1.5km to 2km anomaly,” he said.

The company was weighing its options on whether to prioritise ore production or exploration of the intrusive system with a larger drilling program, or to do both concurrently, he said.

“Any time that you have a mining lease that is producing signifi cant grade with the potential to provide you with significantly more tonnes and which is helping you to show evidence of a much larger intrusiverelated gold system that could provide a significant bulk tonnage or company making proposition, you ought to be excited,” he said

 .Cannindah eyes a Mount Leyshon-sized gold prize