The Batangas Gold project in the Philippines

Red Mountain to receive $1.7m as partner lists in UK

Red Mountain Mining’s strategic funding partner Bluebird Merchant Ventures have completed their capital raising, of  GBP$1.675m (AUD$3.1m) and they have now listed on the London Stock Exchange’s main market.

Bluebird signed a deal with Red Mountain last year to farm into their high grade Batangas Gold project in the Philippines by way of staged payments paid to Red Mountain, with some payments being subject to Bluebird successfully listing in London.

Stage one of the deal required Bluebird to pay US$1.7m (AUD$2.6m) to Red Mountain Mining to earn a 25% share in the project, of which US$500k was paid last year.

Red Mountain will now receive a further US$1.3m or around AUD$1.7m (including repaid loans and some JV contributions) to help progress the permitting of the project, complete the DFS which has already been substantially worked on, and drill out some gold targets near the existing high grade resource.

When added to the $1.19m recently raised by Red Mountain the company will now have a reasonable war chest to progress the Batangas project.

In a sign that the market may have oversold Red Mountain stock due to the delay in Bluebird completing its listing, the deal metrics value 100% of the Batangas Gold project at around $9m or 0.34c per Red Mountain share on an undiluted basis.  It even values the retained 75% portion of the project at 2.6c a share, considerably higher than the current trading price of 0.1c per share.

Following formation of the new JV, each party will fund its share of costs until either the Sole Funding Option (additional USD 1.7 million) or the Stage 2 Funding Option (additional USD 3.8 million) are executed by Bluebird within 13 months of Bluebird listing which will increased Bluebird’s stake in the project to 50.1%.  Red Mountain will also subscribe for GBP500 000 worth of Bluebird stock in the IPO delivering them around 4.7% of the company.

Red Mountain Managing Director Jon Dugdale said,

“The success of Bluebird’s IPO and Admission to trading on the LSE today, is a major milestone for both Red Mountain and Bluebird, and represents a strong vote of confidence in the planned, high grade, Batangas Gold Project development.”

“This releases the shackles on the project, and will allow the new JV to get on with completing the DFS; a geotechnical and resource target drilling program, and permitting of the Batangas Gold Project development.”

The Batangas project has been notable for its very high grades, with trenching and drilling results often proving up ounce to the tonne dirt.

Armed with some cash, a potentially near term project, a partner with some funding ability and a project that regularly throws up impressive grades, Red Mountain are now starting to look dangerous. 

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Total Shareholder Return as at 28/02/18

1 year TSR5 year TSR
33rdPOZ Minerals371%28%
167thWest African Resources68%6%
794thRed Mountain Mining-69%-65%
711 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
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Source: Morningstar

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