Red 5 grows Darlot resource

Jan 15, 2018

Red 5 grows Darlot resource

RED 5 has announced a maiden JORC resource for its newly acquired
Darlot operation in Western Australia’s Eastern Goldfields, more than
quadrupling the last reported estimate.

Kristie Batten, 22 Dec 2017

 

The maiden measured, indicated and inferred resource for Darlot is 6 million tonnes at4.6 grams per tonne gold for 895,000 ounces of gold, using a 2gpt cut-off. The most recent SAMREC estimate by Gold Fields was 1.2Mt at 5.97gpt gold for 224,000oz. “The increase in ounces compared with the previous SAMREC estimates reflects a variety of factors including a lower cut-off grade given the increase in the gold price since those estimates were completed, the inclusion of extensions to existing mining areas that were previously deemed to have been sterilised, and the application of different economic criteria and modifying factors more applicable to a junior gold producer like Red 5,” managing director Mark Williams said. “The mineralisation is far from closed off and we have identified numerous opportunities to further expand the resource with targeted drilling that will commence in early 2018.
When combined with the recently acquired King of the Hills (KotH) project, the increase grows Red 5’s Eastern Goldfields resources to 1.3 million ounces of gold. Red 5 also announced a maiden probable ore reserve of 1Mt at 4gpt gold for 131,000oz gold. “With the recommencement of grade control and targeted drilling, the Darlot ore reserves will be reassessed,” Williams said.

“These include resource extensions and targets that have been identified and further refined by the 3D seismic survey from existing interpretations and the improved geological understanding gained over the last few years. “The 3D seismic has also aided in the targeting of a number of deep targets. Shallower oxide targets from pre-JORC 2012 resources which show good potential to develop a series of small shallow pits will also be evaluated.

“Work conducted by SRK Consulting has indicated that a number of these resources have the potential to develop as small operating pits for future ore feed for Darlot following additional work.” Red 5 launched an Eastern Goldfields consolidation strategy in August, paying a combined A$34.5 million in cash and shares to Gold Fields and Saracen Mineral Holdings for Darlot and KotH assets, respectively.

Five gold shipments for 12,300oz of gold have been achieved since Red 5 took ownership on October 2. Guidance for the December quarter is 13,000-16,000oz and Red 5 expects production to come in at the upper end. Red 5 said the remnant mining program at Darlot was exceeding expectations in terms of tonnage and grade.

“Operationally, the project is performing well with mining of the Darlot underground orebody benefitting from our strategy to target extensions to existing mining areas,” Williams said. The company is working on ways to increase capacity of the mill. Pit N Portal Mining Services has been awarded the mining contract for KotH and mining is set to restart next month.

The first stockpiled ore from (KotH) has been successfully trucked and milled at Darlot. Red 5 has set production guidance for 2018 at 85,000-95,000oz. Shares in Red 5 closed at 5.8c yesterday, capitalising the company at just under $72 million.