December quarter production from its flagship King of the Hills gold project near Leonora, Western Australia, was 53,107oz at an average head grade of 1.45 grams per tonne.
Encouragingly, the ore from its KOTH and Darlot mines supported the mill running at an annualised run rate of 6.1 million tonnes per annum from mid-November following maintenance shutdowns to increase long-term crusher reliability.
The processing nameplate is 4Mtpa.
Red 5 said it continues to target production of around 215,000oz for FY24, having produced some 108,000oz for the first half.
While costs are yet to be revealed, the September quarter’s all-in sustaining costs for production of 55,000oz was A$1696/oz.
The average realised sales price for the December period was $2619/oz.
The Eastern Goldfields miner started 2024 with cash and bullion of $53 million and net debt of under $50 million, following $10 million in accelerated debt repayments.
Red 5 is looking to refinance its total debts of $103 million over the coming months with a new and cheaper corporate debt facility – a move that will not only derisk its balance sheet and improve optionality to acquire other potential ore sources within haulage distance, but could also make it a more attractive takeover target.
The KOTH mill has already proven it can turn marginal operations, such as the Darlot underground, into longer-lived assets, and with the mill proving to have more muscle than designed – even before planned upgrades, the company has indicated it is considering increasing its spending.
With reserves of 2.5Moz and resources of 4.5Moz at KOTH alone, Red 5 said it had no need to acquire additional assets, but was always open to the idea.
More likely, Genesis Minerals, the original owner of Darlot and operator of two mills to the south, may be interested in a takeover. At the same time, Silver Lake Resources snapped up almost 12% in Red 5 last year after being trumped by Genesis in a bid to buy St Barbara’s Gwalia operations and is also in the picture.
Red 5 shares have traded between 12.5-38c over the past year, with the stock last traded at 28c, capitalising it at $970 million.
The miner was valued at almost $1.4 billion before Christmas.
With steady production, the company is looking to rejoin the ASX 200 in the coming months.
