Red Mountain Mining (ASX:RMX) has released the results of a pre-feasibility study on the Batangas gold project in the Philippines. The PFS was based on a small reserve estimate of 128,000 ounces of gold in the open pit, of which just 116,000 ounces would be recovered. Fortunately the small operation also comes at a low price, and Red Mountain estimates it will be able to bring this project into production at an initial capex of just US$16M (which does include a new CIL plant).
The operating costs will also be low at just $735/oz with an all-in cost (including the initial capex) of US$914/oz (which isn’t really surprising considering the average grade of the open pit ore is in excess of 4 g/t). The NPV5% based on a gold price of US$1330/oz is approximately A$34M (but it’s unclear whether this is a pre-tax or post tax amount). A good start, but the real upside potential will come from the 300,000+ ounces that haven’t been included in the reserve statement and the mine plan.
It will also be very interesting to see how the new President is impacting the company’s development plans, as he doesn’t seem to be too keen on open pit mining in his country.
Go to Red Mountain’s websiteThe author has no position in Red Mountain Mining. Please read the disclaimer
