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Red Mountain Mining's trenching yields high grade gold at Lobo
Monday, May 19, 2014 by Proactive Investors

Red Mountain Mining extends high-grade South West Breccia gold shoot at the Lobo Prospect of its Batangas Gold Project.
Red Mountain Mining extends high-grade South West Breccia gold shoot at the Lobo Prospect of its Batangas Gold Project.
Red Mountain Mining (ASX: RMX) has made an exceptionally thick and high grade intersection of of 19.4 metres at 8.24 grams per tonne gold in the South West Breccia shoot at the Lobo Prospect in the Batangas Gold Project, Philippines.

This extends the SWB further to the northeast.

Additional trenching is in progress along strike to the northeast to extend this significant high grade zone at surface.

Following results from this surface trenching, a drilling program will be designed to test for immediate depth extensions.

A deeper drill hole (LB114) is in progress, testing for extension of the existing high-grade gold resource down plunge of recent intersection LB 110 of 6 metres at 7.16g/t gold.

“This exceptionally thick and high grade intersection extends what is already a fantastic, outcropping ore-body,” managing director Jon Dugdale said.

“Our current focus is to extend the South West Breccia high-grade resource at surface and at depth.”

Trenching Details

The new trenching intersection of 19.4 metres at 8.24g/t gold including 5.05 metres at 15.7g/t gold extends the previously announced zone intersected by Trench 27 (5 metres at 7.15g/t gold).

This is located northeast of an interpreted offsetting normal fault, opening up potential to the northeast of the SWB resource.

South West Breccia

The SWB is part of the company’s Lobo Mineral Production Sharing Agreement within the broader Batangas Gold Project.

It hosts current Indicated and Inferred Resources of 194,000 tonnes at 7.2g/t gold for 45,000 ounces of gold.

Drilling has delivered expected intersections of high grade gold with the metallurgical hole returning 6 metres at 7.16g/t gold including 3 metres at 11.5g/t gold.

Batangas Scoping Study

The drilling and trenching results have the potential to add to the South West Breccia resources, which already forms the initial open pit for an attractive Scoping Study with low pre-production capital cost of $16.7 million and IRR of 70%.

Mine revenue is estimated at $134 million 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.

Initial production is planned to be open pit mining inventory from the South West Breccia (SWB) resources on the granted Lobo mining permit (Mineral Production Sharing Agreement - MPSA), following which the higher grade mining inventory from Kay Tanda West resources will be transported from the granted Archangel MPSA, about 15 kilometres by road.

Analysis

The latest trenching result further demonstrates the value of Red Mountain Mining’s focus on extending the South West Breccia high-grade resource at surface and at depth.

There are share price catalysts ahead including further trenching as well as drilling to test for immediate depth extensions.

Exploration success here will further build the resource upgrade case at SWB, which will enhance the already attractive initial Scoping Study economics.