Name and Location
Batangas gold project, Manila, the Philippines.

Client
Red Mountain Mining.

Project Description
Initial definitive feasibility study (DFS) results have confirmed low capital expenditure, low operating costs, a high internal rate of return and economically robust cash flow over the initial 5.2 years of mining and processing of existing gold resources at the Batangas gold project.

The first phase of the DFS focuses on mining, metallurgy and processing cost and recovery inputs for the initial
5.2 years production target of 100 000 oz of gold and 250 000 oz of silver. The initial two years of production will be from the high-grade South West Breccia openpit at Lobo, mining and processing 174 000 t at 6.8 g/t gold.

The second, 3.25 year production phase will mine, transport and process 854 000 t at 2.6 g/t gold and 12 g/t silver from Kay Tanda West orebody, at Archangel, 15 km by road to the east of the Lobo plant.

The production target is underpinned by current Joint Ore Reserves Committee-compliant indicated resources totalling 2.97-million tonnes at 2.4 g/t gold, containing 227 000 oz of gold.

Red Mountain has a further 3.2-million tonnes of inferred resources grading 2.1g/t gold, containing 218 000 oz that are not included in the DFS.

The total indicated and inferred resources at the Batangas gold project is 6.19-million tonnes grading 2.2 g/t gold, containing 444 000 oz of gold.

Net Present Value/Internal Rate of Return
The November 2014 update on the project’s DFS estimated that the project would have a net present value (NPV) of A$17.6-million and an internal rate of return (IRR) of 46%; however, with the updated financials, the project’s NPV had increased to A$28.5-million, at a gold price of A$1 600/oz, while the IRR was 65%.

Value
The initial DFS estimates a capital investment of A$22.2-million. Updated capital cost inputs are preliminary at this stage and will be the main focus of the second, detailed engineering phase of the DFS.

Duration
The construction is expected to start in the June quarter of 2015, and processing/gold production to start in the March quarter of 2016, subject to financing.

Latest Developments
Based on the encouraging initial DFS results, the Red Mountain board has approved proceeding to the final, detailed design phase of the DFS, which is targeted to be completed, in parallel with final mine permitting of the project, in the first half of 2015.
Meanwhile, the Batangas gold project is expected to benefit from the increase in the Australian dollar gold price and the substantial reduction in fuel costs, owner Red Mountain has said.

Red Mountain has reported that projected free cash flow from the project has increased from the initial A$30-million to A$45-million.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Red Mountain Mining, tel +61 8 9226 5668, fax +61 8 9486 8616 or email info@redmm.com.au.