Red Mountain up on scoping study.
Red Mountain up on scoping study.

Shares in Red Mountain Mining spiked after the company released the results of a scoping study into its Batangas gold project in the Philippines, which revealed it as a low-cost proposition with a solid chance of early payback.

Red Mountain said it expected to recoup the initial $16.7 million development and start-up costs within 14 months of the mine's operation.

The study envisages production of 90,000 ounces of gold over an initial 4.5-year minelife.

Projected life of mine revenue from gold sales is $134 million, based on a gold price of $1500 an ounce.

The project is expected to yield free cash for Red Mountain of about $40 million over the initial 4.5-year minelife.

C1 cash operating costs were estimated at $769 per ounce of gold recovered.

Managing director Jon Dugdale said the results of the scoping study showed the company could establish the project relatively quickly, generate early cashflow and payback upfront capital costs within a short timeframe, based only on known existing resources.

"We'll continue our exploration drilling campaign testing high grade targets at the Lobo prospect and anything we find there could improve the bottom line even further," he said.

Red Mountain shares were up 0.2 cents, or 11.77 per cent, to 1.9 cents at 8.45am after spiking to a high of 2.2 cents in earlier trade.

The West Australian

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