PERTH (miningweekly.com) – Gold developer Red Mountain Mining on Thursday revealed that its Batangas project, in Manila, could deliver some A$52-million in operating cash flow during the first 5.2 years of operation.

Red Mountain was in the midst of compiling a definitive feasibility study (DFS), which in September resulted in the miner delivering an increase in gold recovery projections along with a new production schedule.

A previously completed scoping study demonstrated the potential for a viable gold mining and processing project that could deliver about 90 000 oz of gold over a four-and-a-half-year mine life.

However, the revised production schedule had estimated that the project could deliver 100 000 oz of gold and 250 000 oz of silver over its 5.2-year mine life.

The initial first two years of production would be sourced from the South West Breccia openpit operation, which would deliver around 174 000 t of ore grading 6.8 g/t gold, while during the remainder of the mine life ore would be sourced from the Kay Tanda West orebody, which would produce some 854 000 t of ore, grading 2.6 g/t gold.

The production target was underpinned by a current Joint Ore Reserve Committee-compliant resource of 2.97-million tonnes, grading 2.4 g/t gold for 227 000 oz of gold. Red Mountain has a further 3.2-million tonnes of inferred resource, containing some 218 000 oz of gold, which is not included in the current studies.

The DFS has indicated that the Batangas project would require a capital investment of around A$18.4-million, and would have an all-in cost of around $998/oz.

“The initial DFS results are encouraging and support our strategy to focus on initially developing a low-cost, high-grade gold project, based on existing indicated resources, that generates strong cash flow and a high rate of return from the outset,” said Red Mountain MD Jon Dugdale.

“In parallel with the development strategy, we will continue to focus on advancing exploration targets where there is potential to add more high-grade ounces to the mining inventory.”

The company was now proceeding with the final phase of the DFS, which had been targeted for completion, along with final mine permitting, for the first half of 2015.