Red 5 Limited, an Australian gold producer, recently announced its third consecutive month of breaking record gold production figures at its Western Australian-based King of the Hills Gold Project. In May 2023, the company reported producing 19,039 ounces of gold from a total of 350,000 tons of ore.
The figures yielded excellent grading figures as well. Of those 19,039 ounces, the company reached an average grade of 1.8 grams per ton, producing a gold recovery figure of 93.6%, breaking Red 5’s previous records.
To make this achievement even more significant, the company shut down its mill and crusher for four consecutive days during May for required maintenance. Even with the downtime, Red 5 still achieved record output figures. The required maintenance involved replacing the concave lines and mantle on the crusher and replacing the discharge grates on the mill with upgraded parts that are nine times the size, allowing for heavier wear.
Following these modifications, Red 5 reported that the underground and open pit mines continued to perform seamlessly. The run-of-mine stockpiles contained approximately 560,000 tons of gold grading at 1.2 grams per ton.
May’s production level of 19,039 ounces marked a significant increase from April’s record-breaking figure of 18,633 ounces. With this excellent progress, Red 5 expects the second half of the 2023 fiscal year to reach somewhere between 90,000 and 105,000 ounces, with the all-in-sustaining costs totaling at $1,750 to $1,950 per ounce, depending on how the coming months play out.
As for June 2023, the company of course hopes to achieve a fourth consecutive month of record-breaking figures. It was only this time last year that Red 5 produced its first gold yield at King of the Hills, and clearly, the results are amplifying quickly.
Following this announcement, Red 5’s shares increased by 6.67%.
Red 5’s vision is “To be a successful multi-operational exploration and mining company, providing benefits to all stakeholders, through the consistent application of technical excellence, and responsible and sustainable industry practices.”
Given all the latest successes at King of the Hills, Red 5 is clearly on track to maintain its vision.
King of the Hills has an estimated lifespan of 16 years. The development capital cost came to $226 million with a short payback period of just 25 months. Red 5 estimates ore reserves of 64.6 million tons grading at 1.15 grams per ton for 2.4 million ounces of contained gold.
The company expects to yield 4 million tons per annum from King of the Hills. The pre-tax net present value of the project at an 8% rate comes to $1.1 billion with a 64% internal rate of return.
The company initially expected all-in-sustaining costs of $1,339 per ounce for years one through six of production, though based on more recent projections, the first year or two may be a bit higher. The company’s life-of-mine all-in-sustaining cost projection is $1,415 per ounce.
King of the Hills sits on the eastern slope of an Archaean granodiorite pluton providing access to Archaean supracrustal greenstone rocks near the Leonora Domain. The gold project offers a few geological features, including the Tarmoola Intrusion felsic granitoid. King of the Hills is just 28 kilometers north of the Leonora township in Western Australia.
Red 5 has 100% ownership over King of the Hills. For the first six years, the company plans to focus on north and south underground mining before cutting back the northern operations for the remaining years. Based on ore reserves, King of the Hills is in the top 10 list of Australian gold deposits.
“The completion of this high-quality Final Feasibility Study, delivering a 2.4 million ounce Ore Reserve, is a pivotal moment for Red 5 shareholders, for our hard-working team and for communities in the Leonora-Leinster region of the Eastern Goldfields. It firmly places KOTH as one of the largest endowed gold mines in Australia,” Mark Williams, the managing director at Red 5, announced when initially discussing the project.
“The development of a long-life ~150kozpa gold mine KOTH will be a transformational event for Red 5. Together with our existing ~100kozpa Darlot Mining Hub, we will soon have two mining hubs within the heart of the Eastern Goldfields of Western Australia, with an aspirational cumulative production that will quickly reposition Red 5 as one of Australia’s next significant mid-tier gold producers,” Williams continued.
Based on the company’s reports from the last few months, Williams’ high expectations clearly panned out. Moving forward, we can likely expect more record-breaking figures from Red 5.
