The company operates the Darlot mine and the brand new King of the Hills gold mine, which achieved its first gold pour exactly a month ago.
Red 5 said today the ramp-up of the new 4.7 million tonne per annum KOTH processing plant was going as expected, with a total mill operating time in excess of 84% achieved during June.
The SAG mill continues to deliver throughput rates in excess of 600 tonnes per hour at moderate mill loads and power draw.
The open pit and underground mines are also now fully operational, with the first underground stope fired on June 20.
Mill feed has been supplemented with higher-grade ore from the Great Western satellite pit.
There is currently over 1Mt of ore on the KOTH run-of-mine pad, equivalent to over two months of processing feedstock.
Meanwhile, Darlot marked its final quarter of processing, with ore from the mine to be trucked to KOTH from this quarter.
Darlot produced 64,261 ounces of gold for FY22, within guidance of 62,000-72,000oz.
The company said costs were expected to be in line with guidance of A$2400-2500 an ounce.
Red 5 managing director Mark Williams said the on-time and on-budget deliver of KOTH was the highlight of the June quarter.
“We now have an excellent platform to embark on this next chapter of Red 5’s growth,” he said.
“The successful ramp-up of production at KOTH will put us on an exciting growth trajectory over the coming quarters, and we look forward to keeping the market informed about our progress during FY23.”
The company reported a June 30 cash balance of $55.6 million, up from $47.4 million at the end of March.
Of that figure, $15.6 million is allocated to reserve accounts and bond guarantees.
Red 5 has fully drawn down on its $175 million KOTH debt facility.
Morgans analyst Mat Collings said it was important to note that FY22 was not indicative of FY23 for Red 5.
“There have been comments in industry press that RED is likely to be the highest cost gold producer in the upcoming reporting season – and it may very well be (we estimate $2803/oz),” he said.
“But Morgans forecast this to reduce to $1814/oz in FY23 as the high cost Darlot mill is placed in care and maintenance, and to reduce further as production reaches full capacity at KOTH in FY24 and beyond – subject to the same cost pressures as the broader industry.
Collings also noted KOTH, which is north of Leonora, sat in a region that was the subject of current consolidation by Genesis Minerals.
Shares in Red 5 were up 3% to 25.2c. Collings has an add recommendation and 48c price target, which will be formally updated later this month after Red 5’s full quarterly report comes out.
