Red Mountain Mining (ASX:RMX) has banked Australian government funding support for its Batangas gold property in the Philippines as new financing from the UK underpins studies and permitting through to the development stage.
The explorer has received A$337,543 as part of Australia's research and development refund program for FY2015.
The claim was in relation to research on metallurgical recovery of semi-refractory fine gold from epithermal gold ores at Batangas as well as research on the environmentally safe disposal and storage of thickened residues in a tropical environment.
This funding is in addition to an agreed repayment to Red Mountain of loans totalling US$850,000 (plus interest and costs) by Red Mountain's Singapore subsidiary upon receipt of stage-1 funding from UK-based investor Bluebird Merchant Ventures.
Last month, Bluebird committed to a two-stage funding arrangement totalling up to US$5.5 million that will earn Bluebird up to 50.1% of Red Mountain Mining Singapore, the entity which controls Batangas.
Stage-1 funding of US $1.7 million under the Bluebird agreement will allow for the completion of a Definitive Feasibility Study (NYSE:DFS) on the project, where initial results confirm low capital and operating costs as well as recovery rates of over 100,000 ounces of gold during the first five years of a 10-year production plan.
The latest investments have coincided with a period of substantial progress at Batangas, with Red Mountain now preparing for a drilling program at the project's key Lobo prospect after rock chips in the area were found to grade as high as 151.6 g/t gold.
Specifically, this work will focus on Lobo's high-grade south west breccia (SWB) resource (221,000 tonnes at 6.3g/t gold) which has been contemplated for initial open pit mining operations.
Drilling is also expected at the project's Tamarind area, which has produced trenches of 3.5 metres at 25.9g/t gold (including 1.5 metres at 56.8g/t gold) and 2.6 metres at 28.6g/t gold (including 1.5 metres at 45.9g/t gold).
Tamarind is considered to have the potential of offering a new SWB-sized system, based on the size of the soil anomaly in the area.
Recent trenching at an extension area of SWB has returned 7 metres at 20.5 g/t gold, 7 metres at 11.5 g/t gold (including 1 metre at 50.9 g/t gold) and 5 metres at 8.83 g/t gold (including 1 metre at 29.3 g/t gold).
These results were from trenches in the vicinity of very high-grade surface rock chip results announced in August, which included 90.4 g/t gold, 23.1 g/t gold and 17.9 g/t gold, from extensions to the main and hangingwall lodes at SWB.
New funding for Red Mountain as Batangas continues to improve its profile is a big plus, especially considering the upside potential related to being able to fund the further development of recent surface sampling successes.
The planned drilling at Lobo and Tamarind represents notable potential for Red Mountain share price catalysts in the near term as does completion of the DFS - which is expected in short order with the support of Bluebird.
An upgraded resource model is planned to be converted to ore reserves on completion of the DFS through the assessment of geotechnical drilling information and a metallurgical model ahead of final mine design.
Another foreseeable milestone expected to add value to the project is the pending approval of an Environmental Compliance Certificate. Red Mountain has already submitted all final responses to questions from the environmental authority to pave the way for this official recommendation.
Importantly, the Bluebird investment funds Batangas through this permitting phase to the start of project development.
Achievement of environmental permitting at Batangas will significantly assist in securing crucial local endorsements and enhancing the overall investment case of the project.
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