Red Mountain Mining (ASX: RMX) is fully-funded for its current drilling program testing high-grade epithermal gold targets at the Lobo Prospect of its Batangas project in the Philippines after completing a shortfall placement of $2.2 million.
The completion of the oversubscribed placement brings the total raised by its pro rata renounceable rights issue to the full $2.81 million it had sought.
Proceeds will also be used to complete a Scoping Study to demonstrate the viability of a potential high-margin gold project at Batangas.
The company has today issued 213,977,644 new ordinary Shares, 106,988,807 new Short-Dated Options, exercisable at $0.015 each on or before 30 June 2014, and 53,494,388 new Long-Dated Options, exercisable at $0.03 each on or before 30 June 2016.
A further 7,055,395 new ordinary Shares, 3,527,697 new Short-Dated Options and 1,763,848 new Long-Dated Options will be issued on clearance of cheques.
The first stage program consists of five diamond drill holes, three at Japanese Tunnel and two at Pica to confirm the thickness and grade of previously drilled and/or sampled high grade gold mineralisation.
This commenced at the start of August, with the first drill hole targeting Japanese Tunnel where surface trenching had returned 5 metres at 10.43 grams per tonne gold, including 1 metre at 25.14g/t gold, and 2 metres at 18.12g/t gold, including 1 metre at 28.69g/t gold.
Assay results are expected to start flowing from the third week of August.
Subsequent drilling is planned to test mapped extensions of the structure to the south west along strike where a broad 8 metre wide zone of intermittently exposed veining about 20 metre southwest of the initial trench indicates continued strong mineralization before the veined zone passes into an area of agglomerate, then under limestone cover.
Previous outcrop sampling of this zone had returned 5 metres at 6.63g/t gold, 9.9g/t silver and 11.47% copper.
This first stage drilling will allow refinement of the Exploration Target and planning of further drilling to define potential Mineral Resources.
The company had previously estimated an Exploration Target in the range of 400,000 tonnes to 700,000 tonnes at from 3.6g/t gold equivalent (gold equ.) to 5.3g/t gold equ. for 45,000 gold equ. ounces to 120,000 gold equ. ounces for the Japanese Tunnel and Pica epithermal vein/lode mineralisation targets.
The second stage will involve extension and infill drilling at the two targets at sufficient density to define Mineral Resources.
Use of Funds
The company has set aside $1.5 million from the capital raising for the Lobo drilling program and another $300,000 for the preliminary Scoping Study.
The remaining funds will be used for general working capital.
Batangas, located 120 kilometres south of Manila, comprises two key gold prospects, Archangel and Lobo, which have combined JORC Mineral Resources estimates of 5.78 million tonnes at 2.2 grams per tonne gold and 3.3g/t silver for 408,000 ounces of gold and 606,000 ounces of silver.
The bulk of resources are currently located at Archangel where surface stockwork gold mineralisation hosted by shallow dipping andesitic volcanics remains open to the east and west
With funding now in place, Red Mountain can proceed with its goal of refining the Exploration Target at the Lobo high grade gold prospect and potentially establishing a maiden JORC Resource.
Exploration success therefore at Lobo has the potential to substantially increase the Resource at the Batangas project from the current 408,000 ounces.
Notably, the additional $2.2 million from the shortfall placement adds to the $1 million in cash and cash equivalents that it held as of 30 June 2013. This compares to its current market capitalisation of $3.72 million.
With cash taking up the lion's share of its value, any exploration successes can only ascribe more value to its assets, which could in turn lead to corresponding increases in the company's share price, which is currently trading at $0.0105.
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