450 construction jobs at King of The Hills gold mine as Red 5 shoots for top 10 spot

Red 5’s bid to propel itself into the realms of Australia’s mid-tier goldminers received a shot in the arm with yesterday’s unveiling of a detailed plan for a standalone plant at its King of The Hills mine near Leonora (reports The West Australian).
18th September 2020
Resources Rising Stars

Red 5’s bid to propel itself into the realms of Australia’s mid-tier goldminers received a shot in the arm with yesterday’s unveiling of a detailed plan for a standalone plant at its King of The Hills mine near Leonora (reports The West Australian).

Underpinned by a 2.4 million ounce ore reserve revealed yesterday, Red 5 said that catapulted the mine into the top 10 of Australia’s largest endowed goldmines.

Red 5’s long-awaited final feasibility study has tipped an initial 16-year mine life at KOTH, with first gold from the revamped mine expected in the 2022 June quarter.

That would see 450 employed during peak construction, with an ongoing 300 contractors and staff during production, up from 125 currently.

At an assumed $2500 per ounce gold price, the study points to a pre-tax net present value of $1.1 billion with a 64 per cent internal rate of return.

The study also anticipates a $226m capital cash splash would be paid back in 25 months, with average annual production of 176,000oz across the first six years.

Speaking at an investor webinar yesterday, Red 5 boss Mark Williams said the study had “underscored King of The Hills to be Australia’s next major gold mine”.

“It provides Red 5 a clear path forward to become a multi-operational mid-tier gold producer by 2022,” he said.

“The ore body remains open at depth and open along strike and we are confident that with additional drilling we are able to expand the underground resources and reserves we have currently estimated in the feasibility study.

“Given the strong economics and our high conviction in the project, it is worth noting that over $25 million in contracts have either been awarded to date or items purchased.

“This includes the camp, the central facilities, the crusher and the mill — so we’re well under way.”

The final feasibility study paves the way for a final investment decision in the coming months.

Red 5, which also owns the Darlot goldmine near Leinster, rounded off the 2019-20 financial year with cash and bullion of $122.3m.

That came after a landmark capital raising of $125m in March and group production of 92,779oz for FY20.

Red 5 yesterday said it would scale back its underground mining at KOTH until the end of the year to make way for the transition to a standalone mill and preserve tonnes.

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