King of the Hills: A golden legacy in strength

Located in WA’s Eastern Goldfields region, the King of the Hills (KOTH) underground gold operation, has long been a cornerstone of the region’s mining industry.

Its history stretches back decades, having passed through various hands and operational strategies, yet remaining a pivotal asset in the Australian gold sector.

In 2024, a significant development reshaped its trajectory — Red 5 merged with Silver Lake Resources in a $2.2b billion deal, forming Vault Minerals (ASX: VAU) and marking a new chapter in KOTH’s ongoing success.

This merger, one of the most significant in recent years, consolidated two of Australia’s mid-tier gold producers into a single powerhouse, unlocking synergies and increasing operational scale.

Evolution of King of the Hills

KOTH was initially developed as an open-pit and underground gold mining operation, gaining prominence over time for its high-grade deposits and consistent output. The mine has undergone multiple phases of ownership and operational changes, with Red 5 acquiring full ownership in 2017.

Under Red 5, KOTH experienced significant investments in infrastructure, technology and exploration, allowing it to expand both its open-pit and underground operations.

Red 5’s strategic development approach saw KOTH become a key producer, with annual output exceeding 100,000oz of gold.

In addition, investments in processing plant upgrades and resource expansion programs positioned KOTH as one of WA’s premier gold mining operations.

Strategic merger: Red 5 & Silver Lake Resources

The merger between Red 5 and Silver Lake Resources was driven by a shared vision of creating a diversified, mid-tier gold producer with enhanced financial strength and scalability.

Under the terms of the all-stock transaction, Red 5 shareholders received 51.7% ownership of the merged entity, while Silver Lake shareholders acquired the remaining 48.3%.

The agreement translated into Red 5 acquiring 100% of Silver Lake’s shares, offering a ratio of 3.434 Red 5 shares for each Silver Lake share.

By joining forces, the newly merged company significantly boosted its production capacity, with a projected output of about 445,000ozpa of gold. This placed the company among the top-tier gold producers in Australia, positioning it for greater market competitiveness and operational efficiency.

Beyond production growth, the merger also consolidated a formidable ore reserve and mineral resource inventory, totalling 4moz in reserves and 12.4moz in total resources.

This provided the company with long-term growth prospects and a stable foundation for future exploration and development.

Operational synergies

With any major corporate merger, leadership alignment plays a crucial role in ensuring smooth integration. The newly formed Vault Minerals’ executive structure incorporated key leaders from both Red 5 and Silver Lake to maximise continuity and leverage combined expertise.

Today, the merged company holds a diversified portfolio of mining assets, with KOTH as a flagship operation.

Operational performance

Even as the merger process unfolded in 2024, KOTH continued delivering strong operational results. In the December 2023 quarter, the operation produced 53,017oz of gold, contributing to a first-half FY24 total of 108,026oz. This marked the third consecutive quarter of output exceeding 50,000oz, underscoring the mine’s efficiency and reliability.

With a newly strengthened corporate structure, KOTH’s future is even brighter. The merged entity aims to optimise production processes, explore further resource expansion opportunities and enhance processing efficiency. A focus on sustainable mining practices and cost-efficient operations will further bolster profitability and long-term viability.

Major expansion plans under vault minerals

Now re-branded as Vault Minerals, an ambitious expansion strategy was announced for the KOTH operation. The company has committed $80m to upgrading and expanding its processing facility there, aiming to increase through-put capacity and improve overall efficiency.

The investment is part of a broader initiative to position KOTH as one of the most productive gold mining operations in Australia.

Expansion objectives

The primary objectives of the $80m expansion include:

• Increased processing capacity: Upgrading the processing plant to handle higher ore volumes, reducing bottlenecks in production.
• Improved recovery rates: Implementing advanced metallurgical techniques to enhance gold recovery and maximise yield.
• Sustainability enhancements: Introducing energy-efficient technologies and water management systems to minimise environmental impact.

Economic & employment impact

The expansion project is expected to generate significant economic benefits for the region.

Vault Minerals has indicated that the project will create about 150 new jobs during the construction phase and an additional 50 permanent roles once the expansion is complete. The opportunities will provide a boost to local communities and strengthen WA’s mining workforce.

Timeline & expected completion

Construction on the expanded processing facility is set to begin in mid-2025, with completion targeted for late 2026. Once operational, the upgraded plant will allow KOTH to increase its annual gold output by about 20%, further solidifying its position as a leading producer in the region.

The road ahead

Looking forward, KOTH is well-positioned to capitalise on its expanded asset base and financial strength.

The merger of Red 5 and Silver Lake Resources represents a transformative moment in Australia’s gold mining landscape. The newly formed Vault Minerals is set for sustained growth, enhanced financial stability and operational excellence.

With the $80m expansion of the KOTH processing facility, Vault Minerals is making a definitive statement about its commitment to long-term success in the Australian gold industry.