Red Mountain’s Batangas to cost $22m

Red Mountain Mining says it will cost $22 million to bring its flagship Batangas gold project in the Philippines into production.

However the company expects to spend $130 million in costs and taxes on the project over its initial seven-year production life, a pre-feasibility study showed.

Red Mountain hopes to generate $190 million in revenue from gold sales over the mine’s initial life, at a gold price of $1,700 per ounce, and $46 million in free cash flow.

The study estimated C1 cash operating costs of about $999/oz of gold recovered.

“Financing of the project will require a certain level of debt financing, particularly for the new CIL processing plant and associated infrastructure,” the company said in a statement.

“Discussions with potential debt financiers are ongoing and will be advanced, targeting financing agreements in parallel with completing the definitive feasibility study.”

Red Mountain managing director Jon Dugdale said the PFS demonstrated the low operating costs, high margins and strong cash flow potential of the gold project.

“The high initial ore reserve grades from surface, averaging over 6.6 grams per tonne gold for the South West Breccia pit, will allow this project to achieve strong early cash flows and a high rate of return on initial capital,” he said.

“In addition, there is potential to expand ore reserves through drilling of the over 320,000oz of additional, mostly inferred, resources and upside potential remains to be tested within the 14 kilometres of identified epithermal gold structures at Lobo.

“The JV partners are now aiming to complete the definitive feasibility study on Batangas by this calendar year.”

Red Mountain shares were unchanged at 0.1 cent each at the close.