Red Mountain (ASX:RMX) bags extra funding

Published at Oct 1, 2015, in Small Caps

A cornerstone investor in a key Red Mountain Mining (ASX:RMX) subsidiary has decided to beef up its stake in the miner by 60% in exchange for a 70% bump in funding.

RMX told the market this morning that Bluebird Merchant Ventures would now seek to take a 25% stake in RMX subsidiary Red Mountain Mining Singapore in return for $1.7 million in funding.

A previous arrangement was for $1 million in funding in exchange for a 15% stake of the subsidiary.

The Singaporean subsdiary is the holder of RMX’s Bantangas Gold Project in the Philippines.

The Batangas Project has an indicated gold resource of 2.97 million tonnes @2.4 grams per tonne for 218,000 ounces of gold.

The $1.7 million in funding will allow RMX to complete a definitive feasibility study on the project and bag all the required permits.

It recently flagged an extension at the Lobo part of the project, saying rock chip samples had the potential to extend a strike zone by 40m.

Grades from rock chip sampling beyond the South West Breccia Main Lode project area included 7m @ 20.5% gold, 7m @ 11.5g/t Au, 1m @ 50.9 g/t Au, and even one hit of 151.6 g/t Au.

RMX said that the rock samples had effectively defined a 40m strike length extension which has not yet been drilled within the top 50m of surface.

“These exceptionally high-grade trenching results have defined a very attractive drilling target, to potentially extend the SWB [South West Breccia] resource,” managing director Jon Dugdale said at the time.

The Lobo area features 82,000 oz. indicated and inferred (604,000 tonnes @ 4.2 g/t) – this includes the South West Breccia Mine, average open pit mining grade 6.8 g/t, and will be RMX’s first start up mine.

The Plan

The Batangas Gold Project in the Philippines

RMX’s plan is to mine 100,000oz of high grade gold over the initial five years at Batangas and use the cash flow to fund expansion and exploration.

Free cash flow from production of the first 100,000 ounces at the Project level is expected to be $45M – recently getting a boost by 50% due to increases in the Australian dollar gold price and a drop in the fuel price in the Philippines.

Capex is forecast to be $15M – set out in a completed Scoping Study and Feasibility Study update – which set operating costs at $US703 ($A1010) an ounce.

Of course, this is all dependent on the completion of a definitive feasibility study and more drilling, making the funding deal vital for RMX.

“We believe this provides a compelling endorsement of the Batangas Gold Project,” he told shareholders.

“The additional funding will provide the opportunity to carry out the planned new drilling program and fast track completion of the DFS and all permitting inputs to allow development of the Batangas Gold Project.”



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