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Red Mountain Mining Kicks Off DFS For Batangas Gold Project, Philippines

Red Mountain Mining (ASX: RMX) has commenced the Definitive Feasibility Study (NYSE:DFS) for its Batangas Gold Project in the Philippines with completion expected by December 2014.

The DFS follows this week's new gold discovery from a drilling program under the South West Breccia (SWB) resource, which has the potential to increase the resource and provide a boost to the economics of the recent Scoping Study.

Perth based Como Engineers have been appointed to manage the DFS, the metallurgical program and the process engineering.

Appointments to complete other aspects of the DFS will be made in consultation with Barry Clout, managing director of Como Engineers, and will include metallurgical testing, geotechnical, residue storage systems, mine planning, civil engineering/infrastructure, environmental and financial modelling.

Jon Dugdale, managing director of Red Mountain, commented: "We are pretty excited to get the DFS officially underway. Our aim is to complete the DFS and all required permitting in parallel so that we are in a position to finance and develop the project from as early as next year.

"Our strategy at Batangas is to develop the project based on identified high grade resources, and continue to explore for new ounces at the same time.

"A key advantage of this project is the very high grade of the, at surface, initial planned production, which provides the opportunity for rapid payback of installed capital."

Batangas scoping study

The scoping study estimated a low $16.7 million pre-production capital cost and attractive IRR of 70%, with projected life of mine revenue of A$134 million for Batangas.

The recent drilling results have the potential to add to the South West Breccia resources, and therefore improve the economics or mine life of the study.

Importantly - the study affirmed that Red Mining can move Batangas into production with achievable capex and attractive project metrics.

The revenue is estimated over the initial 4.5 year mine life on production of 90,000 ounces of gold while net cash flow is estimated at $40 million. Payback is expected in 1.2 years.

Average C3 are A$1050 per ounce while C1 cash costs are about A$769 per ounce.

The study is entirely based on a simple open pit mining and carbon in leach processing of existing, high grade resources, of which 90% of the resources to be mined are in the Indicated category.

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