PERTH (miningweekly.com) – Gold miner Red 5 has reported a solid quarter of production for the three months to September, with gold production reaching 20 283 oz, which was on par with the 20 707 oz produced in the June quarter.

Gold sales for the three months to September also remained stable at 19 932 oz, compared with the 20 929 oz sold in the June quarter.

The gold miner has maintained its production guidance for the full 2021 financial year at between 90 000 oz and 98 000 oz, with all-in sustaining costs targeted at A$1 830/oz to A$2 030/oz.

MD Mark Williams on Thursday noted that the company has implemented a cost-saving initiative at the Darlot operation, in Western Australia, targeting annual savings of A$200/oz, and was making a proactive investment in a new crusher and mill bearings to help drive plant reliability and performance, which will have the potential to increase throughput by some 20%.

“Over the next few months, we will be gearing up to commence production from the new Great Western satellite deposit, which forms part of our Darlot mining hub, and progressively scaling back underground production from the King of the Hills operation in preparation for the start of construction for the bulk mining operation,” he said.

“The September quarter has been a critical period in the company’s growth and development, with the delivery of a final feasibility study (FFS) for a bulk mining and processing operation at the King of the Hills confirming the project’s status as one of the top ten gold deposits in Australia based on ore reserves and providing a clear roadmap for Red 5 to transition into a multi-operational, midtier gold producer,” said Williams.

“The FFS delivered an updated ore reserve of 2.4-million ounces of contained gold, underpinning a life-of-mine average production of 146 000 oz/y over an initial 16-year mine life, at an all-in sustaining cost of A$1 415/oz.”

Williams noted that based on a A$2 500/oz gold price, the King of the Hills operation would deliver a A$1.1-billion pre-tax net present value, a 64% internal rate of return and a capital payback period of 25 months for the projected A$226-million capital investment required.

“Following the completion of the King of the Hills FFS, we are now reviewing tenders for an engineering, procurement and construction contract for the project construction and we are also progressing to plan for completion of the project finance package.

“We expect to make a final investment decision for King of the Hills development in the coming months, putting us on track for first gold production in the June quarter of 2022.