Red 5 Signs Option Agreement to Purchase Cables and Mission Gold Deposits

THE BOURSE WHISPERER: Red 5 Limited (ASX: RED), via its wholly-owned subsidiary, Darlot Mining Company (DMC), has entered into an Option and Sub-lease Agreement for the right to acquire a sub-lease over the 13 blocks of Exploration Licence E37/1220 in Western Australia.

The acquisition area totals 38.7 square kilometres and includes the Cables and Mission gold deposits, which were last reported by Leopard Resources on 5 February 2014 to contain total combined JORC 2004 Inferred Resources of 185,000 ounces.

Red 5 will pay a total acquisition cost of $2 million, with a further $500,000 payable on delineation and reporting of a 500,000 ounce JORC 2012 Resource.

The deposits are located 10 kilometres from Red 5’s Darlot gold mining and processing operations.

According to Red 5 managing director Mark Williams the proposed acquisition represents another strategic low-risk opportunity to grow the company’s Resource base in the area surrounding the Darlot gold processing plant.

“We are delighted to have the option to acquire the southern portion of E37/1220,” Williams said in the company’s announcement to the Australian Securities Exchange.

“It is last reported to contain JORC 2004 Inferred Resources totalling 185,000 ounces and is located adjacent to our existing Darlot operations.

“Significantly, the rock units hosting the Cables and Mission deposits are similar to those that host the Centenary orebody, which is currently being mined from underground at Darlot.

“This agreement over the Cables and Missions deposits follows the option agreement we recently secured over the Great Western deposit, with these proposed acquisitions having the potential to provide additional sources of ore feed for the Darlot processing plant.”

The agreement entitles Red 5 to conduct due diligence and drilling activities within the Sub-lease Area to determine the potential of the Cables and Mission deposits to be upgraded to Indicated ± Measured Resource status, and to be mined and trucked to the company’s Darlot processing plant.

The company indicated that should the due diligence be completed to its satisfaction and the option exercised, Red 5 intends to conduct drilling programs and other activities to produce a JORC 2012 compliant Resource as quickly as possible.