Shares in West Perth-based Red 5 have surged after it received the final approval from the Philippines government for its $US73 million ($A79 million) Siana gold project.
The company today said it expects to start construction at the 10-year, open cut and underground mine early next year. The operation is expected to produce 849,000 ounces of gold.
Shares in Red 5 jumped three cents, or 18.75 per cent, to 19c at 11:33 AEDT.
The project's bankable feasibility study has estimated a cash flow of $US228 million and a pre-tax internal rate of return of 38 per cent, using a base case gold price of $US800 an ounce.
The price of gold last traded at about $US1,140/oz.
Total life of mine costs will average $US473/oz.
"With gold prices currently at record levels, Siana has the potential to deliver very attractive cash flow to the Company," managing director Greg Edwards said.
"We are very much looking forward to bringing the Project into early production to capitalise on the projected strong margins."
