Red Mountain Mining (ASX:RMX) is planning to restart drilling immediately at its Batangas Gold Project in the Philippines after a new target was identified with geological similarities to the project's existing high grade South West Breccia (SWB) resource.
SWB has produced samples grading up to 151.6 g/t gold.
The new Benito Target has returned trenching and rock chip results including 4 metres at 70.7 g/t Silver and 1.5 metres at 227.9 g/t silver and 0.42% copper.
This data indicates that Benito is higher in the geological silver-copper zone of the epithermal system relative to SWB mineralisation but at a similar level to the surface exposure of the West Drift area which is characterised by high silver-copper grades at surface and high-grade gold at depth.
New exploration results have also been produced for Batangas’ Tamarind target, including 2.3 metres at 10.7 g/t gold in the footwall of the previously sampled HW Lode.
Previous results in this area have included 3.5 metres at 25.9 g/t gold and 2.6 metres at 28.6 g/t gold.
Drilling is also planned to test the extensions to Main Lode, immediately southwest of the SWB resource where previous trenching results have included 7 metres at 20.5 g/t gold, 7 metres at 11.5 g/t gold and 5 metres at 8.83 g/t gold.
A program of 2 to 4 drill holes is planned to test the SWB extension and Tamarind targets as part of a program that will also include 3 to 5 geotechnical holes for confirmation of ground conditions estimated in the Definitive Feasibility Study (DFS).
Financing update
The drilling and completion of the DFS on Batangas will be funded from the proceeds of strategic funding partner, Bluebird Merchant Ventures' (BMV) admission to the London Stock Exchange.
Listing is now expected to occur in January 2016 and a firm date is expected in the near future following approval of the BMV Prospectus by the UK Listing Authority.
Under the agreement signed with BMV earlier this year, a two-stage funding arrangement totalling up to US$5.5 million will earn BMV up to 50.1% of wholly owned subsidiary, Red Mountain Mining Singapore which controls Batangas.
Stage 1 funding of US$1.7 million under the Agreement will earn BMV 25% of Red Mountain Mining Singapore and will allow the joint venture to complete the DFS, with initial results confirming low capital and operating costs and recovery of over 100,000 ounces of gold during the initial 5 years of a 10-year production plan.
Analysis
The definition of a new drilling target and the planning of more drilling at highly prospective areas of Batangas sets up Red Mountain for near-term newsflow which could deliver price catalysts for the company.
Strong grades for silver and copper at Benito also add diversity to Batangas, emphasising the project’s upside potential ahead of DFS completion.
Bluebird’s listing on the LSE will be a major milestone for Red Mountain, since the explorer will directly and immediately benefit from the investor’s exposure to this market.
Upcoming catalysts:
- Bluebird listing and funding and repayment of >USD 1 million to RMX, January 2016.
- Drilling and potential resource upgrade, February / March 2016.
- Feasibility Study, March 2016.
- Final permitting submissions, April 2016.
- From then, Bluebird sole funding then potential permitting, Q2 – Q3 2016.
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