Millennium Minerals' flagship Nullagine Gold Project is just starting to hit its stride.

CEO Glenn Dovaston is full of praise for his team which has streamlined production and achieved new exploration success, as the company works to increase its minelife and become a significant ASX-listed mid-tier gold producer.

Dovaston said the early exploration success, upping JORC ore reserves by 27% in April after just four months of drilling, gave the company confidence in its strategy to not only replace mined ounces but also in parallel, incrementally increase minelife.

He is also excited by the prospect of "deeper" drilling - going below the typically 50m-deep orebodies at Nullagine - which he hopes could extend total minelife to 10 years.

In just over six months, the company has raised AUD$21 million, become debt-free, started a $10 million exploration program and substantially increased its ore reserves and resources to 1 million ounces of gold on its 264sqkm holding in the East Pilbara.

Yet Dovaston believes the market doesn't yet fully appreciate Millennium's success and ongoing potential.

"We'd been drilling for just on four months, which isn't very long - and we were able to add an extra 57,000oz to our ore reserve," he said.

"Then we depleted 23,000oz of that reserve which generated cashflow at the same time, so I actually look at it to say that if you can do that in four months, that's a pretty significant outcome."

With all-in sustaining costs during 2016 expected to be between $1180-$1220 an ounce and an Australian dollar gold price around the $1700 an ounce mark, Nullagine is producing both gold and a healthy margin.

"We're in an enviable position because we're generating significant cash flow from our operations and we will use it, to put it back in to our project to increase minelife," Dovaston said.

He said it was the right time to be an Australian gold producer.

"We've got about AUD$19 million in the bank at the moment," he told MiningNews.net at the start of June.

"The market, I think, is looking for a big kicker and at this point in time what we're doing is going to be incremental increases in minelife - when we get into the deeper drilling, that for us will be the game-changer.

"But we're now very confident that by the end of this year, we'll have a 2-3 year minelife and we'll have produced over 85,000oz of gold, so it's a pretty good position to be in."

Millennium owns its near-new CIL processing plant, which is operating smoothly above nameplate capacity at almost 2 million tonnes per annum.

The plant is fed from a series of relatively shallow, modest-grade open pits and Dovaston said the under-explored area reminded him of the Eastern Goldfields 25 years ago.

"Earlier in my career in the Eastern Goldfields, around Mt Pleasant, Mt Morgans and Leonora, we were drilling shallow oxide pits and mining them and we know now that a lot of those mines have significant depth potential and are still operating," he said.

"So we actually see Nullagine as the Goldfields very early on - it has not been explored systematically as one consolidated package before by a publicly-listed company and we're pretty excited that this is potentially a good long-term gold operation."

The first stage of Millennium's exploration program resulted in updated reserves and resources for seven existing deposits and established maiden resources at the new deposits of Round Hill and Anne de Vidia, where a drilling highlight of 3m at 24.49gpt gold included 1m at 67gpt.

Anne de Vidia is just 9km from the processing plant and more exploration is planned to see if it is linked to the nearby Castlemaine prospect, which has returned high-grade drilling results including an intercept of 8m at 9.89gpt gold.

"Anne de Vidia is a good structure, from what we understand at this point in time is that it's high grade with modest tonnes," Dovaston said.

"Within the Middle Creek Mining Centre, there is a cluster of existing open pits that we've just mined as well as newly identified projects nearby, so I think that area is going to develop into a significant mining centre in its own right.

"We have over 30 targets in our production pipeline.

"Each of these target areas are advancing at different stages - some are starting with geochemical work and structural mapping with others already being converted into maiden resources and then reserves which we will report in a reserve update later this year.

"We are confident of achieving our target of a 2-3 year minelife by the end of this year which not only delivers strong cashflow, it also allows us time to develop and understand the full potential of our strategic land holding within the Nullagine region as well as the deeper material."

He said the company's infrastructure, processes and team were all working well together and boded well for further exploration success and establishing a greater minelife to give investors increasing confidence.

Beyond the brownfields exploration, Millennium has bigger growth targets in the under-explored Pilbara, including possible joint ventures, toll treatment or acquisitions.

"We're quite confident we can increase our minelife, which will ultimately give comfort to shareholders and potential investors that there is that long-term view, and long-term opportunity available to them," Dovaston said. "We believe that will ultimately be reflected in a significant increase in our share price."

Aside for the anticipated reserve update in September, Dovaston said there would be news flow in coming months from both brownfields targets and potential fresh underground material as the drilling program went deeper.

"We're not talking about going down to 500m here, we're talking about between 100-200m so this is still early on with regard to the development of this goldfield and we want to test and prove the depth potential is there," he said.

"That will give us the potential to expand and increase our minelife probably past that 3-4 year life, potentially up to 10 years."

He said any deeper material would also give Millennium the opportunity to come up with processing solutions for the fresh material, such as an add-on to the existing plant or introducing flotation.

"Deeper material could be something different metallurgically but again, it's not difficult, it's been done in the Eastern Goldfields and it's not going to be complex," Dovaston said.

"We'll have a good handle on that by the end of this year and that's going to be the kicker for the company going forward and will potentially extend the minelife significantly."

Millennium Minerals - At a glance

HEAD OFFICE

Ground floor 10 Kings Park Road

West Perth WA 6005

Ph: +61 8 9216 9011

Fax: +61 8 9481 0288

Email: info@mmltd.com.au

Web: www.millenniumminerals.com.au

DIRECTORS

Richard Procter, Glenn Dovaston, Greg Bittar, Ross Gillon, Tim Kennedy, Michael Chye, Bruno Lorenzon.

QUOTED SHARES ON ISSUE

742 million

MARKET CAP

$107.7 million