Red Mountain Mining (ASX:RMX) has signed a strategic financing agreement with a UK-based investor which will carry the explorer’s Batangas gold project in the Philippines through initial mine development.
The deal broached earlier this month with Bluebird Merchant Ventures increases Batangas’ stage-1 funding from US$1 million (A$1.4 million) to US$1.7 million.
This will allow for the funding of Batangas advancement through definitive feasibility, final permitting and the start of the development phase.
On completion of stage-1 funding the parties will form a 25% Bluebird/75% Red Mountain incorporated joint venture and project expenditure will be funded according to the parties’ respective JV interests.
The agreement also gives Bluebird a number of further investment options, including an opportunity to increase its equity in Red Mountain’s Singapore subsidiary to a 50.1% stake.
A variation on a previously established loan agreement with Bluebird will cover any shortfall in the funding to November.
Batangas progress
Red Mountain is now beginning preparations for a drilling program at Batangas with an eye on the Lobo prospect’s high-grade south west breccia (SWB ) resource (221,000 tonnes at 6.3g/t gold) and the Tamarind target.
Tamarind has produced trenches of 3.5 metres at 25.9g/t gold (including 1.5 metres at 56.8g/t gold) and 2.6 metres at 28.6g/t gold (including 1.5 metres at 45.9g/t gold).
Tamarind is considered to have the potential of offering a brand new SWB-sized system, based on the size of the soil anomaly in the area.
Other recent activity has included rock chips up to 151.6 g/t gold while and the definition of a 40-metre strike length extension that is open to the southwest towards the Japanese Tunnel area.
Recent trenching at an extension area of SWB has returned 7 metres at 20.5 g/t gold, 7 metres at 11.5 g/t gold (including 1 metre at 50.9 g/t gold) and 5 metres at 8.83 g/t gold (including 1metre at 29.3 g/t gold).
These new results were from trenches in the vicinity of the very high-grade surface rock chip results announced in August, which included 90.4 g/t gold, 23.1 g/t gold and 17.9 g/t gold, from extensions to the main and hangingwall lodes at SWB.
Lobo’s high-grade epithermal gold and copper-silver mineralisation occurs within a more than 15-kilometre strike length of epithermal vein-breccia hosting structures that have been mapped.
Only 1 kilometre of this strike, however, has been tested by drilling to date.
Batangas currently has a global indicated and inferred resource of 6.19 million tonnes at 2.2g/t for 444,000 ounces of contained gold.
Analysis
The new financing agreement with Bluebird is a positive milestone for Red Mountain as it will provide funding to advance Batangas to definitive feasibility, final permitting and initial development.
The endorsement will more immediately support follow-up of extremely tantalising rock chip and soil anomaly readings that could double the existing resource if the targets prove as richly endowed as suspected.
Success in this upcoming exploration work may represent a price catalyst for Red Mountain and contribute to a step change in the scope and value of Batangas.
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