Red Mountain Mining says it is keen to fast-track development at its Batangas gold project in the Philippines after encountering an exceptionally high-grade gold lode of about 1 ounce per tonne.
The Perth-based explorer, which is chaired by former Barminco chief Neil Warburton, said this morning that surface trenching operations at the project intersected 2 metres at 31.1 grams per tonne of gold, or just over one ounce, including 1 metre @ 60.2g/t gold.
The new trench is located 100 metres along strike from the Japanese Tunnel zone of the Batangas project, at which exploration has defined a resource of around 400,000 ounces of gold.
“This extends the zone by another couple of hundred metres,” Red Mountain managing director Jon Dugdale told Business News.
“It’s quite a breakthrough, it opens up potential to build the very high grade resources on top of what we have already got, which is about 400,000 ounces or so.
“That’ll feed directly into our scoping study for a gold mine development that we plan to move forward fairly quickly over the next 12 months or so.”
Mr Dugdale said the scoping study would be completed by the end of the year, with a definitive feasibility study to be conducted within the next 12 months.
If all goes well with the formal approvals process, Mr Dugdale said the company hopes to start construction at the mine in early 2015, with first production likely to occur in mid to late 2015, pending a suitable ore processing agreement with a third party.
Cash costs at the mine are likely to come in between $500 and $700/oz.
Mr Dugdale also said the discovery announced today would enhance the project’s attractiveness to a potential project financier.
“It will enhance the economics around our scoping study, so it means we will have more chance of attracting finance to build the mine.
“It won’t be a very capital intensive project, given that the start is very high grade, we can produce a fair bit of gold without processing too many tonnes.”
At 12:25PM, WST, Red Mountain shares were steady at 0.6 cents.
