WITH mining activity at Siana Gold Project halted, Red 5 Limited has carried out engineering studies which have demonstrated the potential to enhance the financial outcomes of the proposed underground mine development. The studies have continued after the first phase of underground development was suspended in May.

An internal review of the June 2016 feasibility study completed by Mining One is ongoing, with the aim of identifying opportunities to further reduce capital and operating costs associated with the proposed underground operation. Key outcomes include:

  • Forecast production remains at 504,000 ounces at an annual rate of about 60,000 ounces over an initial 8-year production mine life;
  • Forecast life-of-mine All-in Cost of approximately US$900-US$950 per ounce, previously US$930-US$980, and All-in Sustaining Cost of approximately US$790-US$840 per ounce, previously US$800-US$850; and
  • Updated maximum draw-down capital cost, staged over 27 months, is now estimated at US$46 million, including a US$3 million contingency and US$3.5 million already expended, compared to US$60 million CAPEX outlined in the June 2016 study.

Red 5 is investigating further opportunities to reduce costs.

Paramina, a Philippines underground mining contractor, made good progress with underground development before the suspension, utilising low-cost methods including hand-held rock drills and small loaders, with a peak workforce of 80.

Combined development of the main, escape way and ventilation declines, including sundry development, reached approximately 445 metres. Incline development from Portal 3 broke through to join up with the main Portal 1 decline prior to the completion of activities, marking a significant milestone in underground development.

On April 18, Red 5’s Philippine-affiliated company, Greenstone Resources, advised the Mines and Geosciences Bureau that open pit mining operations at Siana would be suspended with immediate effect. This decision was made as a result of:

  • The operational impact which the ongoing uncertainty regarding regulatory and government mining policy in the Philippines has had on the group’s operations; and
  • The group’s assessment of the likely resulting changes to open pit operations after taking into account the delay in the approval of the Environmental Compliance Certificate amendment for the long-term Tailings Storage Facility (TSF) and other mining challenges.

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