THE latest high-grade gold results from Red Mountain Mining’s Batangas Gold Project in southern Luzon have increased the potential of early trial mining and ore sale or toll processing. The results look likely to increase and upgrade the high-grade, at surface, mineral resource in the South West Breccia (SWB) lode structure of Lobo prospect.

The company previously identified four zones of very high grade, outcropping gold mineralization along the 500 metre exposed strike length of SWB lode - SWB Extended, Japanese Tunnel, Trench 7 Area and the Limestone Target. The zones are being assessed for selective early mining and potential toll processing or ore sales.

Additional trenching has been completed at SWB Extended and Limestone, and further trenching and selective drilling is expected to define and potentially extend an early mining measured resource.

Assessment of the early mining targets will be carried out in parallel with the current definitive feasibility study on mining and processing of the majority of the open pit mining inventory based on the indicated resource that includes 174,000 tonnes @ 6.8 grams/tonne gold from the planned SWB open pit.

Very high grade trenching intersections were produced from SWB Extended and related colluvial gold deposits, such as 4.5 metres @ 14.8 grams/tonne, including 1.0 metre at 44.9 from SWB Lode and 6.0 metres @ 13.03 grams/tonne from colluvium above the SWB hangingwall lode. Boulder results include 33.5 grams/tonne, 27.7 grams/tonne and 11.5 grams/tonne from the extension.

The colluvial gravel/cobble zone is interpreted to lie above a hangingwall wedge of lode material that has been previously sampled to the southwest. Highlights include 6 metres @ 31.2 grams/tonne and 8.35 metres @ 18.3.

Red Mountain’s managing director Jon Dugdale says, “We continue to find extensions to these very high grade gold surface zones at Lobo, which present opportunity for early trial mining and ore sale or toll processing. It is rare to have such high grade gold at surface and we have the opportunity to give the project a great head start.”

Earlier this year Red Mountain produced an interim DFS financial model update that indicated operating cash flow of Aus$67 million, based on a gold price of Aus$1600 and reduced diesel fuel costs in the Philippines compared to initial interim DFS financial modelling released on November 20, 2014. This includes low pre-production capital of Aus$18.4 million, sustaining capital of Aus$4.3 million, and a 50% increase in free cash flow to Aus$45 million for the initial 5.2 years of production.