Image: Red 5.
BY EMMA DAVIES
RED 5 recently celebrated 30 years of continuous production at its newly acquired Darlot gold mine in the Eastern Goldfields, WA, and with positive results from drilling at its King of the Hills mine, the company looks set for a productive year ahead.
The Darlot mine was acquired by Red 5 from Gold Fields in October 2017 and has historically produced almost 3 million ounces of gold – with the company confident the site will continue to produce consistently for years to come.
Red 5’s other major operation, the King of the Hills (KOTH) mine, which is acquired from Saracen also in 2017, had seen its resources almost triple to 1.9 million ounces of gold.
“The December quarter has been one of the most exciting periods in our recent history,” Red 5 managing director Mark Williams said.
“Operationally, we were able to deliver a strong production performance from Darlot and King of the Hills, while from an exploration and growth perspective we achieved a major breakthrough – identifying what is shaping up as a potentially transformational bulk mining opportunity at King of the Hills.”
The December quarter – which marked a full 12 months since Red 5 assumed ownership of the Darlot and King of the Hills assets – saw both mines deliver solid gold production.
“With the ramp-up of mining at King of the Hills completed during the quarter, we were able to achieve a steady-state annualised production rate of greater than 100,000 ounces per annum, a significant milestone for the group,” Mr Williams said.
“Our WA gold operations delivered gold production of 26,118 ounces for the quarter, continuing our strong growth momentum and putting us on-track to achieve our forecast production guidance for the 2019 Financial Year of 100,000-115,000 ounces at an All-In Sustaining Cost of $1350-1550 per ounce.
“AISC for the quarter averaged $1547 and, with mining now at steady-state, we have commenced the implementation of an active cost review process to help drive lower operating costs across our operations into the future.”
Encouraging Results
Mr Williams said that, without a doubt, Red 5’s exploration and resources development programs delivered the most excitement for the quarter.
“After first flagging the potential for bulk mining at King of the Hills in late September 2018, we have since made good progress to define this opportunity, with recent work programs culminating in the delivery of an initial ‘proof-of-concept’ bulk mining mineral resource for KOTH of 1.88 million ounces of contained gold,” he said.
“This initial resource was based on a portion of the prospective granodiorite contact zone, and represents a genuine game-changer for Red 5 with the potential to underpin a significant long-term bulk mining operation.”
Based on the strength of the initial resource, Red 5 commenced a strategic review to evaluate the economics of a bulk underground and/or open pit mining operation at KOTH – together with a standalone processing facility on-site.
This review would incorporate the results of the drilling program that commenced during the December quarter.
“Outside of KOTH, our exploration programs at Darlot have also continued to deliver positive results, highlighting the potential to further grow Resources and Reserves and extend mine life,” Mr Williams said.
“Darlot celebrated its 30 year anniversary of continuous gold production in November 2018, with both near-mine and regional exploration programs continuing to deliver positive results.”
The company was also implementing a regional drilling program in early March 2019 to unlock further value along the highly prospective Tarmoola and Ursus Fault systems.
This third exploration program would be conducted parallel with the ongoing underground diamond drill program and assaying of the historical drill core.
“We are very excited about the significant untapped exploration potential at KOTH over and above the exciting new bulk mining opportunity which we are currently pursuing,” Mr Williams said.
“The broader tenement package is very under-explored and we believe that the outstanding suite of targets we have defined have potential to develop and grow the current resource base.
“We believe that the geological setting of each target demonstrates characteristics analogous to KOTH and Gwalia-style gold mineralisation and present significant discovery opportunities.”
Bulk Mining
Mr Williams said the 30,000m drilling program at King of the Hills was making solid progress and delivering some exceptional results early, including some of the most impressive broad zones of gold mineralisation ever reported at the mine.
“Our underground drilling program is off to a strong start with these highly encouraging intercepts,” he said.
“We have a growing level of confidence in the potential to upgrade and expand the existing 1.88moz bulk mineral resource.
“These drilling results, together with the results being generated from the program of assaying unassayed historical drill core, are expected to contribute towards future increases in the KOTH bulk mining Resource.”
The results from the drilling program included an exceptional intercept of 312m grading 2.01 grams per tonne gold, plus numerous thick composite intercepts of significant gold mineralization – results which provided further impetus to the bulk mining strategy at KOTH and, together with the assay results, are expected to contribute towards enhancing the tonnage, grade and classification of the KOTH resource.
Mr Williams said that a strategic review had commenced to examine potential bulk mining development options.
“This will include the merits of open pit mining, as well as the economics of building a standalone processing plant at King of the Hills versus continuing our existing truck-to-Darlot business model,” Mr Williams said.
“We expect that this strategic review will be completed around the middle of this year, providing us with a clearer insight into how best to move the project forward.”
Production guidance for the March 2019 quarter had been adjusted to take into consideration a mill maintenance shutdown planned in February however production was still expected to be in the range of between 24,000 and 28,000oz at an AISC of between $1450 and$1650 per ounce with the bulk mining of the KOTH site expected to be completed in the June 2019 quarter.
“We feel like we could be on the cusp of something really big at King of the Hills,” he said.