The above intercept was part of a broader 22.1m at 57.1g/t that also included 5.2m at 232.4g/t gold, in the McVeigh domain.

The company said the result was the highest it had reported from Madsen and was in the top percentile of all assays returned historically from the previously mined project, which had produced 2.5 million ounces of gold.

Pure Gold's underground drilling is designed to de-risk the project's near-term production opportunity. A feasibility study is slated for release in the fourth quarter.

The company has about C$24 million (US$18.5 million) in its treasury and said last week it was fully funded to finalise permitting, extract a 7,200 tonne bulk sample and drill a further 21,000m for exploration.

AngloGold Ashanti increased its stake in the company to 14.9% as part of a C$20.9 million (US$16.1 million) capital raising that closed late last month.

Pure Gold said the higher grade mineralisation within the zones showed good continuity, implying the effects of dilution might be minimised with selective mining of higher grade. 

It said drilling also returned higher grades than expected, including 4.5m at 19.6g/t, from two holes in the South Austin domain to further define near-surface mineralisation. 

Madsen has an indicated 6.2 million tonne resource grading 8.7g/t for 1.74Moz of gold and an inferred 1.2Mt at 7.9g/t for 296,000oz.

Shares in the company closed up C1c to 65c, up about 16% year-to-date, capitalising it at $145.2 million.