The company is now more confident that its King of the Hills asset can ultimately support a large-scale bulk-mining operation.
ASX-listed Red 5 (ASX:RED) has reported a new mineral resource estimate for its King of the Hills (KOTH) gold mine in Western Australia.
The asset’s indicated and inferred resource clocks in at 28.7 million tonnes (Mt) grading 2 grams per tonne (g/t) gold for an estimated 1.88 million ounces (Moz) of the precious metal.
Red 5 says the resource covers an area of the mine’s Eastern Margin Contact, where the company recently discovered a large zone of high-grade veins and stockworks. This discovery could make it possible for Red 5 to use open-pit and/or bulk underground stoping methods.
“This initial bulk resource at King of the Hills is a gamechanger for Red 5. Based on the drilling completed to date and assessing only a portion of the broader granodiorite contact zone, the size and scale of this resource gives us more confidence that King of the Hills can ultimately support a large-scale bulk mining operation,” Red 5 Managing Director Mark Williams said in a statement.
“Given the strength of this early result, we’re now underway with preliminary studies to assess the merits of a standalone mining and processing operation,” he added. It’s expected that bulk mining at KOTH will allow for an easier mining process and will lower mining costs.
Red 5 plans to explore this bulk-mining opportunity in three phases, with the first being to upgrade the newly announced resource. Next it will increase the resource in tonnage and grade through exploration, and lastly it will conduct a strategic review of development options.
The company has also identified other high-priority areas along the Eastern Margin Contact that may host extra resources.
This new resource for KOTH is an increase from August, when Red 5 announced an indicated and inferred resource of 3.9 million tonnes grading 5.3 g/t gold for an estimated 658,000 ounces of gold. The August estimate was solely based around high-grade vein domains.
For the time being, Red 5 is in the process of completing a 30,000-meter underground drill program that was announced in early November and is docketed to be completed in the June 2019 quarter. As drilling continues, the company will assess the aforementioned high-priority areas.
Red 5 acquired KOTH from Saracen Mineral Holdings (ASX:SAR) in 2017, the same year it acquired the producing Darlot gold mine from Gold Fields (NYSE:GFI). In addition to these properties, the company also holds properties in the Philippines, although they are not its focus.
At the end of trading on the ASX on Tuesday (December 4) Red 5’s share price was up 15.71 percent, closing at AU$0.08.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.