Red 5 Ltd (ASX:RED) has awarded an underground mine development contract to Redpath Australia, a leading underground mining specialist, to help develop its Darlot gold mine in Western Australia.
The 12-month contract was awarded following a competitive tender process and includes an option to be extended at six-monthly intervals.
Redpath’s mining team and equipment were mobilised to the site and commenced underground mine development on October 1, 2021.
The initial contract value is $13 million and will be funded by cash flow from the Darlot operations.
This contract constitutes the next step in Red 5’s Darlot Mine Plan and King of the Hills (KOTH) Processing Hub Strategy, through which the company intends to leverage its assets in the area to create a local processing mill at its King of the Hill Project.
To access four sites
Redpath will undertake three kilometres of rapid underground mine development at Darlot, separate from Red 5’s existing activities conducted by the company’s own teams.
The drilling campaign is intended to provide access to new mine areas in Burswood, Pedersen, Middle Waters South and Thomson that underpin Darlot’s current mine plan and are intended to feed production until June 2023.
Red 5 anticipates that extensions to the mining development contract would open further areas for exploitation within Darlot’s 1.3 million-ounce underground mineral resource.
Darlot two-year mine inventory with new mining areas to be established FY22
Low Processing Hub cost base
The company’s transition strategy will transform Darlot into an underground satellite mine to the King of the Hills (KOTH) Processing Hub, with first gold to be produced in the June quarter of 2022.
Investment in mine development is a key part of Red 5’s strategy to reduce dependence on remnant mining at the historic Darlot site which has been successfully mined for more than 30 years.
RED’s lower cost-base of the KOTH Processing Hub has the potential to extend the Darlot underground mine life for several years.
Read: Red 5’s King of the Hills continues to take shape amid construction ramp-up
Dark Horse of Australian Mining
Red 5 came roaring onto the Australian gold mining market in 2017 with its acquisition of King of the Hills and Darlot mines, rapidly establishing the company as a strong competitor in the industry with the ninth largest gold reserve in Australia.
Unsatisfied to rest on those laurels, RED has hurdled development milestone after milestone in its mine and production strategy, passing 50% completion of KOTH in July within budget and on schedule.
KOTH is expected to be operational within the next eight months, with first gold pour expected in the second quarter of 2022 and Darlot soon to follow with an expected 62,000-72,000 ounces of production to feed the KOTH ore mills.
