Red 5 Planning Western Australia Gold Production Hub

The Darlot mine (above) is an underground operation that feeds 800,000 mt/y of ore to a processing plant that produces
around 80,000 oz/y of gold.
The Red 5 Ltd. has announced separate agreements to acquire the operating Darlot gold mine from Gold Fields Ltd. and the advanced King of the Hills gold project from West Australian gold producer Saracen Mineral Holdings. Both assets are located in West Australia’s Eastern Goldfields, about 900 kilometers (km) northeast of Perth, with King of the Hills located about 80 km south of Darlot.

Red 5 considers the Darlot processing plant to be a key to unlocking numerous isolated gold deposits that lie within a 100-km radius. The first additional deposit to be pursued under this strategy will be the King of the Hills project.

Total consideration for the Darlot acquisition is A$18.5 million, comprising A$12 million in cash and 130 million Red 5 shares. The cash component is made up of A$7 million up front and A$5 million deferred for up to 24 months. The deferred consideration may be taken as additional shares in Red 5 or as cash at Gold Fields’ election.

Consideration for the King of the Hills acquisition is A$7 million cash up front, 90 million Red 5 shares, and A$4.5 million in cash or Red 5 shares at Saracen’s election 12 months after completion of the transaction.

Red 5 anticipates that both transactions will be completed by the end of September. Once completed, the transactions will see both Gold Fields and Saracen join the Red 5 share register as major shareholders.

Darlot operations includes an 830,000-metric-tons-per-year (mt/y) carbon- in-pulp and carbon-in-leach processing plant, with excess capacity, that was refurbished between 2010 and 2013 for a total cost of A$17 million; a 402-room mining camp; and a total land-holding of approximately 13,900 ha. Production in 2016 totaled 66,000 oz of gold. Mineral resources as of year-end 2016 totaled 1.2 million mt at a grade of 6 g/mt of gold for 224,000 oz of contained gold.

The King of the Hills project is located on a previously mined property and has a current underground indicated and inferred mineral resource of 2.71 million mt grading 4.6 g/mt of gold for 402,000 oz of contained gold; a new underground mine design developed by Saracen following a six-month trial underground mining campaign; established site infrastructure; and an 11,751-ha tenement holding with excellent exploration potential.

Saracen has identified multiple lodes extending to more than 1.95 km and remaining open at depth that provide numerous exploration drilling targets.

Red 5’s Stage 1 development plan for the two properties is to maximize throughput at the Darlot mill over an initial threeto four-year period by processing ore both from Darlot and from King of the Hills underground mining operations. Stage 2 will center on increasing the company’s reserve base in the Eastern Goldfields through exploration within the 25,700-ha tenement acquired under the two transactions.

As featured in Womp 2017 Vol 09 -