Red 5’s updated resource estimate at King of the Hills gold project underpins bulk mining options

Australian gold producer Red 5 (ASX: RED) has announced a bulk mining mineral resource estimate for the newly-identified Eastern Margin Contact zone at its King of the Hills gold mine in Western Australia’s eastern goldfields region.

The indicated and inferred resource is an update on historical records and comprises 28.7 million tonnes grading 2.0 grams per tonne gold for an estimated 1.88 million ounces of contained gold at a 1.0g/t gold cut-off grade, which could be reduced if a large open pit is determined to be economic.

The updated resource has been developed to demonstrate proof-of-concept for bulk mining by modelling of the gold-bearing vein stockworks between the high-grade veins identified in drilling by past owners.

The resource is nearby to the recent discovery of a large zone of high-grade veins and stockworks.

It was calculated over a 2200 metre area along strike of the 4000m granodiorite and ultramafic Eastern Margin Contact, to a depth below the base of the current open pit of 130m in the south and 300m in the north.

Red 5 said the zone is believed to bulk out to significant widths, creating the potential for open pit or large-scale bulk underground stoping methods.

The company plans to investigate the bulk mining opportunity in three stages commencing with an upgrade of the almost 1.9moz bulk resource.

It will then move onto exploration activities to increase the total tonnage and grade, and conduct a strategic review of mine development and standalone processing plant construction options.

Damage zone

Red 5 said a variable width “damage zone” which spans the granodiorite and ultramafics at the Eastern Margin Contact contains “tension cracks” housing gold mineralisation.

The mineralisation occurs within small and larger, more visible veins which collectively, create a network of veinlet stockworks containing additional gold to enhance the grade of the bulk material.

The high-grade narrow veins and veinlets are less than 10cm and up to 30cm in width, and typically separated by low-grade (less than 1.0g/t gold) mineralisation.

The network can be “bulked out” into large zones of strong gold mineralisation which would potentially be amenable to extraction using bulk mining methods.

Drilling to date has been designed to intersect mineralisation which occurs at the contact zone but has not been optimal for targeting the vein networks.

Similarly, the majority of historical drilling has not effectively tested the stockworks and the bulk tonnage opportunity presented by these much broader mineralised zones.

Major drilling program

Earlier this month, Red 5 commenced a major 30,000m underground diamond drilling campaign to evaluate the potential for a large-scale future bulk mining operation within the Eastern Margin Contact.

A significant part of the program has been designed to target stockwork development around the “damage zone”and will cover an initial area of 1400m with a vertical range of approximately 350m beneath the historic Tarmoola open pit in an area close to existing underground mining development.

The most prospective areas have been targeted according to the stress regime developed by the Tarmoola and neighbouring Ursus shears against the granodiorite when these significant structures were active.

These shears are believed to be the main conduit for the mineralising fluids to ingress along the Eastern Margin Contact and the proximity to the Tarmoola Shear has been interpreted to be highly prospective.

Red 5 managing director Mark Williams said the emerging opportunity at the Eastern Margin Contact could be a potential “game changer”.

“Bulking out a complex network of high-grade vein and veinlets and stockworks in the “damage zone” in order to provide a bulk mining opportunity is a new concept for King of the Hills,” he said.

“We are developing sufficient confidence in the scale and importance of this zone … which could ultimately deliver an important growth opportunity for our company.”

Drilling is due for completion early next year and the results will feed into the strategic review targeted for delivery by mid-2019.

At midday, shares in Red 5 were trading 14.29% higher at $0.080.