The King of the Hills project is slated to be a major Australian gold deposit, with a 16-year mine life. Can you tell us a bit about the planned production phases during these years and projected output?
King of the Hills (KOTH) is a unique mine – an amazing asset, really – with a number of unique aspects. Firstly, because of the brownfield nature of the project, we’ll be able to mine a large open pit and a large underground concurrently, which typically doesn’t happen. So we have 16 years in the open pit and five years initially mining underground. However the underground is open in all directions and we do expect, with further drilling, that that underground mine life will be extended.
The other aspect to note is that we’ll be closing the current surface operations at Darlot (but continuing to operate the underground mine), which is our second gold mine about a hundred kilometers to the north-east of KOTH. And we’ll be trucking the ore from Darlot to KOTH as our satellite mine. So essentially, KOTH will be a central processing hub for the region being fed from three ore sources: one, the large open pit at KOTH, two, the large underground at KOTH, and thirdly, the underground at Darlot. Overall, with those three ore sources for FY23, although we haven’t put out guidance, we are inspirationally aiming for 200,000+ ounces per annum from those three ore sources.
The bulk mining concept planned for KOTH came about in September 2018, when we took a step back from the details and we evaluated the project differently to previous underground mining at KOTH. We had a number of planning and preparation phases, including the pre-feasibility study in August 2019, and then the final feasibility study in 2020. Throughout these studies it was clear that KOTH was a highly valuable prospective mine, we secured the equity for the project early and we were able to start construction almost immediately the feasibility study was completed. So today we are in a really good spot, we’ve been able to get ahead of the cost curve and the labour pressures that are evident at the moment, and the first gold is due to be poured on time and within budget in the June 2022 quarter.
KOTH is located in one of the Eastern Goldfields. Can you share more about the history of the region and future prospects?
The Eastern Goldfields is one of the most prolific gold mining areas in the world. And in particular, we have two outstanding gold mines in the Goldfields – Darlot and KOTH, and both have great history. Darlot in particular has been mine concurrently for the last 30+ years and is one of the only Goldfields mines to be mined continuously during its life. It has produced over three million ounces and we believe that there’s more life in Darlot to come.
In its over 30+ years of mining, it has produced over two million ounces, from both open pit and underground
KOTH also has an interesting history. In its over 30+ years of mining, it has produced over two million ounces, from both open pit and underground. The benefit of a brownfields site such as KOTH is twofold. Firstly, because the brownfield nature of the deposit and the project, the key technical aspects are known as a result of previous mining and processing at KOTH, including the geology, the metallurgy, the geotechnical properties, the availability of water, all of those aspects are well understood. Therefore, from a project development point of view, it’s already largely de-risked.
Secondly, the benefit of the brownfield site is that we have tens of millions of dollars of existing infrastructure already in place from both the open pit and the underground, such as roads, waste storage facilities, tailing storage facilities, water bores underground. We also have the underground portal, ventilation and benefit from many kilometers of existing underground development.
Can you share more details about the SAG Mill being built? What is the strategy behind keeping it all on-site?
The SAG mill that we’ve selected is at the heart of the operation. It’s a 36-foot FLSmidth SAG mill. It really is a fantastic asset for us. We were able to pick it up because of the advance work that we did in 2020 and secure this key strategic asset, and all the key components are now installed on site.
Red 5, having a large single-stage SAG, we have the ability to mill 4.7 million tons, but we believe that there is plenty of latent capacity in the mill. So our operations team are targeting to be able to drive that latent capacity upwards and use that as an opportunity and maximize the full potential of this high-tech processing plant.
Last year was a great success for Red 5. Please discuss some of the milestones.
2021 was a successful year for us because of the key decisions we made in 2020. One of these was a bold decision that the board of directors took to be able to raise the bulk of the capital for the project in March 2020.
It was an unusual move because we were still mid feasibility study. Typically, many companies do this process sequentially, but we worked in parallel. And the advantage of that is we were able to employ our key construction leaders who worked in parallel with the study team over a six-month period to be able to deliver a strong feasibility study, but also to prepare and plan for the construction phase.
Once the feasibility study was finished in September 2020, we were able to start construction in the December quarter 2020. We’ve been constructing for almost 18 months now, and this has enabled us to get ahead of the price inflation for equipment and navigate the difficulty in the labour market. We were able to put in place fixed price contracts for the key project contracts, and these have shielded us, giving us the confidence to be able to deliver on time and within budget.
From a management point of view, we have a great team, including Warren King as our project manager for the construction phase and Jason Grieve, a very high-calibre chief operating officer, who has recruited an outstanding site leadership team and ensured we are well prepared to start operations strongly at KOTH.
Are you looking to acquire more satellite pits to feed into KOTH’s processing plant? Can you speak to some of Red 5’s future growth plans?
We’ve laser-focused on being able to finish construction, with smooth commissioning, and then get into steady state production throughout the rest of the calendar year, with the first gold being poured in the June quarter. Once we have been able to deliver that, next year we’ll begin to evaluate options to support the potential expansion of capacity of the KOTH processing plant. Over the past four-and-a-half years, The Company has built up a significant tenement package of both Darlot and KOTH, and we have a really strong organic pipeline of high-quality deposits. We have three satellite deposits that have been drilled today within a short distance to the KOTH mill, and there are other significant opportunities in our existing pipeline that we’ll look to maximize from 2023 calendar year onwards.
