PERTH (miningweekly.com) – ASX-listed Red 5 on Tuesday reported an initial 1.9-million-ounce resource for the Eastern Margin Contact deposit at the King of the Hills project, in Western Australia, triggering a strategic review of the bulk mining options at the operation.

The deposit is estimated to host an indicated and inferred resource of 28.7-million tonnes, grading 2 g/t gold for 1.88-million ounces of contained gold.

Red 5’s share price surged nearly 19% on the stock exchange to a high of 8.3c a share.

MD Mark Williams described the initial bulk resource at King of the Hills as a “game-changer” for Red 5.

“Based on the drilling completed to date and assessing only a portion of the broader granodiorite contact zone, the size and scale of this resource gives us more confidence that King of the Hills can ultimately support a large-scale bulk mining operation,” he said.

The resource estimate is based on underground drilling and historical drilling data covering 2 200 m of strike of the Eastern Margin Contact to a depth below pit of 130 m.

The mineralisation remained open both down-dip and along strike in both directions.

Williams said that, given the strength of this early result, the company had started preliminary studies to assess the merits of a standalone mining and processing operation.

The investigation into the bulk mining opportunity would be conducted in three phases, with Phase 1 aimed at upgrading the initial bulk mining mineral resource. Phase 2 would consist of exploration to increase the resource in total tonnage and potentially grade, while Phase 3 would consist of a strategic review of development options, openpit and bulk underground potential, and would look at regional deposits not currently in the resource.

A 30 000 m drilling programme currently under way would continue throughout the first half of 2019, with the results feeding into the strategic review, targeted for completion by mid-year.