While surging costs and labour shortages have caused blowouts and delays on projects by some of the big iron ore miners, King of the Hills was completed on-time and in line with its original $226 million budget thanks to a judicious decision Mr Williams made just before the global pandemic arrived in Australia.
In March 2020, Red 5 tapped the market for $125 million and locked in long lead items and fixed-price contracts for the project, even before it had completed its definitive feasibility study.
The project was built over the subsequent two years with Red 5 celebrating first gold from its new 4.7Mtpa processing plant in June.
Mr Williams said King of the Hills completion on time and on budget represented an exceptional effort by the Red 5 team, supported by contracting partners MACA Interquip and Macmahon.
“If we were building the mine at today’s prices, the construction cost would likely start with a three and have a significantly longer timeline,” he said.
Red 5 is ramping up King of the Hills with hopes of declaring commercial production later this year and issuing financial year 2023 output guidance.
Ultimately, King of the Hills is expected to produce an average 150,000oz per annum over an initial 16-year mine life, with a rate of nearly 200,000ozpa in the first few years of production.
The project’s processing plant will also be supplemented by higher-grade ore feed trucked from the company’s Darlot mine 100km to the north.
King of the Hills — a brownfields site that was originally mined by St Barbara — comes online at a pivotal time, given talks about potential consolidation of the broader Leonora gold district.
Raleigh Finlayson’s Genesis Minerals moved on embattled miner Dacian Gold last month and is in ongoing talks with bigger player St Barbara, which holds a 10.5Moz resource in the area centred on its deep and ageing Gwalia mine.
In fact, Mr Finlayson has some familiarity with King of the Hills, having sold the asset to Red 5 for $16 million in cash and shares in 2017 when he headed former gold miner Saracen Mineral Holdings.
At the same time, Red 5 picked up the operating but ageing Darlot gold mine from Gold Fields for $18.5m.
Mr Williams noted the King of the Hills mill was one of the biggest and most strategic new plants to be constructed in the Leonora district in years.
Its size and modern features will also make it one of the lowest operating cost plants in WA.
Mr Williams said the plant also had the potential to be a strategic processing facility for stranded deposits in the region.
“We have recently initiated studies to determine the optimal final size of the plant,” he said.
“Given our 16-year reserve life, the latent capacity in the SAG mill, and our numerous organic and inorganic growth options in the district, we believe there is a strong case to further expand the operation in the future.”
