Red Mountain Mining Ltd. has taken a step closer to producing gold from a near-surface deposit in Batangas when it secured “full funding” for the final study and the permits needed.
According to Red Mountain, it has signed up a private company backed by London-based investors which, as a strategic partner, would infuse $5.5 million into the Lobo project.
In a statement, the Australian firm said the deal would involve a two-stage transaction that would see the conversion of a 50-percent stake in Red Mountain’s fully owned subsidiary RMMS, which itself controlled the gold project assets in the Batangas town of Lobo.
“This strategic investment partnership is a very important milestone for the company as it is anticipated to provide funding to complete the DFS (definitive feasibility study) … for the low-cost Batangas gold project,” Red Mountain managing director Jon Dugdale said.
In December, the company said the preliminary results of the DFS firmed up the prospects of a low-cost, early payback gold project in Batangas, which could produce 100,000 ounces of the precious metal within the first five years of operation.
The project may also produce 250,000 ounces of silver by processing about a million tons of ore, Red Mountain said.
With a total indicated and inferred resource of 6.19 million tons of material, the Lobo project is believed to contain 444,000 ounces of gold.
At a benchmark price of $1,250 per ounce, the Lobo project is expected to ring up $52 million in operating cash flow within five years.
The company is pushing the DFS toward a final, detailed design phase, which it hopes to complete by the first half of next year.
Red Mountain is awaiting regulators’ approval of the declaration of mining prospect feasibility as well as the environmental compliance certificate, which it expects in the first quarter of 2015.