Production from the three Western Australian mines, including the KOTH underground, was 55,000 ounces at all-in sustaining costs of A$1696/oz, with the company tipping it is well positioned to deliver above its 215,000oz upper end of guidance with AISC still targeted between $1850-$2100/oz.
The real surprise has been the Darlot satellite operation.
With the costs now stripped out, and no need to rely on remnant ore to feed the now shuttered Darlot mill, Red 5 has been able to focus on improving the grade, and opening up a new bulk stopes in the Federation 1195 area.
For the September quarter, Darlot remained the highest grade ore source feeding the KOTH mill at 2.65 grams per tonne.
Red 5’s chief corporate development officer Patrick Duffy said the company would have more to say about its future strategy in the coming months, but the miner can see a life well beyond the 2-3 years of remaining reserves.
“Without stripping out costs difficult to see how Darlot could have survived as a standalone asset operating asset,” Duffy said.
“Analysis put minimal value on Darlot, but it is now highly profitable with low cost milling at KOTH and high gold prices.”
Chief operating officer Richard Hay said the success at Darlot showed how Red 5’s new mill could potentially turn marginal mines into deposits into longer-life assets.
Consolidation is still swirling around the Leonora-Laverton region, most notably the latest movement in the ownership saga of Dacian Gold, and Red 5 is increasingly in a better position and able to play a part.
In the short term it is all about generating cash by running its mill at 5.5 million tonnes per annum, above nameplate of 4Mtpa, and looking at expansion options.
After sales generating $44 million in revenue, the company paid down another $15 million under its accelerated debt plan to $113 million, and now it has normalised creditor payments, it aims to refinance early in 2024.
Cash and bullion were steady at $45 million.
More robust balance sheet
While is well placed to start thinking about starting spending again, Red 5 is under no pressure to acquire other projects.
The KOTH pit alone can now provide sufficient baseload, but with the underground ore giving a boost, Red 5 has realigned its in pit program to deliver mining improvements.
Its grade control drilling within the stage two pit encountered 26m at 168gpt, a lode that was missed in the wider spaced resource drilling.
There is also an increasing potential to deepen the south pit area, and improve the economics of the next few years.
KOTH underground continues to exceed productivity rates, particularly in the West and Regal areas.
With steady production, the company is confident of joining the ASX 200 in the coming months.
