Seeking Alpha

Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
Proactiveinvestors
My blog:
Proactiveinvestors
  • Red Mountain Mining Boosts High-Grade Gold Resource At Lobo, Philippines 0 comments
    Jun 30, 2014 8:14 PM

    Red Mountain Mining's (ASX:RMX) shares are expected to open higher after recent drilling success within the Batangas Gold Project in the Philippines has culminated in an 82% increase to the Lobo resource.

    This could see an expansion of the mine life as a result. As well as having a positive impact on the Definitive Feasibility Study expected to be completed by December 2014.

    Lobo now hosts an Indicated and Inferred Resource of: 604,000 tonnes at 4.2g/t gold for 82,000 ounces.

    Importantly the average grade of 4.2g/t gold is substantially higher than most new project grades.

    Final permitting submissions have completed and lodged with the Philippines Government for approval to develop the Batangas Gold Project.

    Jon Dugdale, managing director, commented: "We are very pleased with this significant resource increase at Lobo, in line with our strategy of finding more high grade ounces at Lobo to extend the planned mine life.

    "The key to the success of this project is the high grade of our initial planned production, and the potential to pay back initial capital very quickly and generate high-margin cashflow from day one.

    "This latest resource upgrade is the first new step in extending the high margin mine life, and our exploration teams continue to discover new prospects with the objective of identifying drilling targets for future resource upgrades."

    Resources

    The new resource at Lobo includes re-estimated South West Breccia (SWB) figures which include new drilling and trenching data, with Indicated Resources increased from 93% to 98% of the total 221,000 tonnes at 6.3g/t gold for 45,000 ounces.

    Batangas in total now hosts an Indicated and Inferred total of 6.19 million tonnes at 2.2g/t gold, containing 444,000 ounces at a 0.85g/t gold cut-off for potential open pit resources and 2.0g/t gold for potential underground resources.

    The Project covers an area of 270 square kilometres that is located 120 kilometres south of Manila on the south coast of Luzon Island, and is within a regional province that is strongly endowed with major gold and copper and gold resources and mining projects.

    Mineralisation within Batangas consists of gold and copper-gold mineralised and pervasively altered andesitic volcanics, intruded by diorite and dacite intrusives, which are overlain in places by younger volcanic sequences.

    Analysis

    Significantly, the resource upgrade is likely to result in a longer mine life at Lobo. The average gold grade is also far higher than median global peer gold development projects.

    A feature of the project is the fast projected payback and its ability generate high-margin cashflow from day one.

    Red Mountain's focus on drilling high grade lode epithermal targets has paid dividends with gold discoveries which have now boosted resources at the Lobo prospect, and the Batangas project.

    Based on Red Mountain's capitalisation at around $7.5 million and over $3 million in cash (March 2014), the E/V to ounce is a miserly $10 per ounce.

    A Scoping Study earlier in the year estimated a low cash cost of A$769 / US$690 per ounce, and a capital cost of A$16.7 million / US$15 million over a mine life of 4.5 years.

    Capital payback is estimated to take 1.2 years from commencement of mining operations.

    Completion of the Definitive Feasibility Study should see a significant increase in resource ounces and total grades, along with an extension of mine life to at least 10 years.

    Proactive Investors has a 6-9 month price target of $0.017 - $0.025 per share.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.