THE DRILL SERGEANT: Red 5 Limited (ASX: RED) announced the completion of maiden JORC 2012-compliant Mineral Resource estimates for the Rainbow and Severn near-mine deposits at the company’s King of the Hills (KOTH) gold project in Western Australia.
Red 5 said the Resources had been calculated on drilling completed by past owners and highlight the potential to define near-mine open pit resources that will support the broader bulk mining strategic review currently underway at KOTH.
The Resources came in as:
Rainbow: Indicated and Inferred Resource of 1.6 million tonnes at 1.3 grams per tonne gold for 67,000 ounces; and
Severn: Indicated and Inferred Resource of 0.9 million tonnes at 1.6g/t gold for 47,900 ounces.
The company said the Resources provide a solid foundation for its strategy of defining open pit ore sources to provide early mill feed to support a potential development of a stand-alone processing facility at KOTH.
The Rainbow resource is approximately 83 per cent oxide and transition, and Severn is around 69 per cent oxide and transition.
“This is a big free-kick for us and the ongoing KOTH bulk mining strategic review,” Red 5 managing director Mark Williams said in the company’s announcement to the Australian Securities Exchange.
“The Rainbow and Severn deposits establish a baseline of open pit Resources within a six-kilometre radius of a potential stand-alone processing plant at King of the Hills which can be developed to provide early mill feed.
“Early cash-flow is important and our objective with this campaign is to delineate sources of oxide and transitional open pit mineralisation that can supplement production from the existing KOTH underground mining operation to feed a potential stand-alone processing plant, should further studies prove positive, during a pre-strip requirement of the KOTH open pit.
“We believe there is excellent potential to continue to grow the near-mine open pit Resource base, with our ongoing regional drilling program designed to progressively test five priority near-mine targets, each of which has the potential to yield further Resources.
“The early success of our regional exploration campaign at KOTH once again demonstrates just how under-explored our broader tenement package is.
“We are confident that we can add to our already significant Resource base with sustained, focused and systematic exploration.
“This is an exciting opportunity for the Company alongside the bulk mining story at KOTH which will unquestionably remain the centrepiece of our growth story over the next few months.”