A recently completed feasibility study for the two projects (encompassing a 15km radius of satellite assets) considered a 129,500 ounce per annum operation with first production in 18 months generating total revenue of $1.4 billion.

Total net cash flow after capital expenses but before tax was estimated at $264 million.

Net present value was calculated at $153 million at a 6% discount rate, with an internal rate of return over the mine life of 30%.

The operation would follow a staged development whereby mining would begin in the second half of 2014, with high-grade ore transported to a third party mill.

Contract open cut mining under Phoenix management will begin at satellite pits and will produce the majority of the mill feed for the first five years.

The Red Dam and smaller satellite pits will begin as required to ensure efficient mine fleet scheduling and optimal ore blending through the plant.

Against a backdrop of recent market volatility in the gold sector, the strategy is expected to deliver benefits of earlier production, larger development flexibility and lower upfront costs.

Total life-of-mine operating costs are expected to be $50.55 per tonne for milling and carbon in leach processing and $11.45 for heap leach processing.

All-in sustaining cash costs were estimated at $989 per ounce.

Phoenix flagged the potential use of existing mining and drilling agreements with Norton Gold Fields.

"This prudent approach to get the project up and running at a more modest capital cost will benefit all shareholders while continuing to grow the company's mining inventory and delivering strong cash flow to grow the business over time," Phoenix managing director Jon Price said.

"We are extremely pleased to be taking the next step towards transforming Phoenix into a sustainable gold producer and are also excited by the substantial upside both within and outside these core projects that can take our mine life well beyond the initial eight years."

Budget mining and haulage costs have been received from a number of local mining contractors with available mining and haulage fleets.

The company said it was progressing discussion with parties in the region regarding toll milling arrangements and expected to execute a formal agreement to facilitate gold production for fiscal 2015.

A key advantage of Castle Hill has been described as its position only 50km from Kalgoorlie.

Operations are expected to leverage off well-established mining infrastructure and services that exist in the region as well as local skills and labour resources.

Phoenix will have a total site workforce of 55 employees across processing and maintenance (31), mining (14) and administration (10), including of environmental, health and safety and management.

Last week, the company announced a 9.5% increase in ore reserves at the site to 1.1Moz.

Updated Red Dam reserves at a 1 gram per tonne cut-off were 1.6Mt at a fully diluted grade of 2.2gpt gold for 110,900oz.

Shares in Phoenix were up 9.7% this morning at 17c.