Kagara shares were released from a trading halt this afternoon and closed up 39 cents, or 13.54 per cent, at $3.27.
Analysts agreed that the zinc and copper miner's initial inferred resource of 72 million tonnes, near Broome, was a sizable deposit.
"This is a subset of a larger inferred resource containing 97 million tonnes," Kagara said.
It said scoping studies showed that the deposit had the potential to be a 10 million tonne underground operation, producing 300,000 tonnes of zinc, 250,000 tonnes of lead and 4.5 million ounces of silver a year.
"The cost of production is expected to be in the lowest quartile of cash costs worldwide," it said.
Kagara said several development options were being considered.
"Defining a reserve from surface drilling is currently cost prohibitive, and an exploration shaft with 2.5 kilometres of lateral development will be required to bring the project to a bankable status," Kagara said.
DJ Carmichael resources analyst James Wilson said the deposit could be massive, with Kagara having drilled only half of its 5km strike length.
"This is great news at the worst possible time, given the state of the zinc price ... which has not been this low since 2005," Wilson said.
"The silver will help a lot."
The low zinc price has led to producers of the metal curtailing projects in recent months.
In the first half of 2008, zinc was 31.7 per cent lower on average than in the previous six months.
Zinc and lead explorer Rox Resources Ltd on Friday cited the low zinc price as the reason it withdrew from a proposed joint venture with base metals miner Avalon Minerals Ltd to explore for zinc on the Lennard Shelf in Western Australia's Kimberley region.
