Red 5 plans for mine restart

Red 5 has completed a final feasibility study for its King of the Hills (KOTH) goldmine, identifying a production restart from 2022.

The study, funded by a $125 million capital raising launched earlier in the year, has approved a 4 million tonnes per annum bulk mining and processing operation at KOTH, in the Eastern Goldfields.

Red 5 expects the mine to produce 2.5 million ounces of gold at an all-in sustaining cost of $1,415/oz over an initial 16-year mine life.

First production is scheduled for the June quarter of 2022.

The company will make a final investment decision in the coming months before moving to on-site construction by early next year. It will now begin early site works and complete final permitting, as well as award contracts and secure project financing.

Red 5 said it was in talks with 12 potential project lenders.

Managing director Mark Williams said KOTH would be a significant new Australian goldmine.

"The FFS has confirmed the technical and financial viability of a major new 4mtpa mining and processing operation at King of the Hills, with optionality to expand to 6mtpa in the future," he said.

"The FFS details the construction of a stand-alone CIL processing facility on-site that will be fed initially by a combination of ore from both open pit and underground mining operations."

Mr Williams said the KOTH operations would benefit from a favourable gold price environment and deliver outstanding financial returns.

The proposed mine holds a pre-tax net present value of $1.1 billion, with a 64 per cent internal rate of return. Its initial capital costs are $226 million.

Red 5 acquired KOTH from Saracen in 2018, and owns the existing Darlot Mining Hub in the Eastern Goldfields. It produced 92,779oz of gold in the year to June 30.

Shares in Red 5 closed up 4.8 per cent to trade at 33 cents.