Red Mountain Mining (ASX: RMX) has returned more high grade copper-gold from diamond drilling at its Lobo Prospect, within the Batangas Gold Project in the Philippines.
Final assays for a diamond drill hole from the West Drift epithermal lode structure show an intersection of 4.6 metres at 4.11% copper and 5.83 grams per tonne (g/t) gold from 152.8 metres, including 2.8 metres at 6.57% copper and 7.79g/t gold.
The high grade copper intersection is coincident with the high grade gold intersection of 4.6 metres at 5.83g/t gold from 152.8 metres, including 2 metres at 8.89g/t gold, announced previously, and further confirms the high grade system that is generally increasing in gold grade with depth.
Previous mining production at the Lobo copper mine was from near surface stoping of massive sulphide mineralisation, mainly Enargite, within the epithermal lode structure.
The copper grades produced by this intersection are in line with the historic grades of 4% to 6% reported for the Lobo copper mine that closed in the late 1960s.
Two drilling rigs are now operating at West Drift testing the epithermal lode structure below and further east under the historic copper production zone.
Drilling is expected to continue for around two to four months, with a third rig to begin in early February targeting the “Jap Tunnel” target, which is around 150 metres south of the South West Breccia resource.
The new “Jap Tunnel” target is being drilled following very promising surface trenching results.
Neil Warburton, executive chairman, told Proactive Investors today he anticipates a resource upgrade for the Lobo Prospect in the September/December quarter this year.
The Lobo prospect is to the immediate west of the gold resources at Batangas’ Archangel Project and also includes the South West Breccia high grade resource.
Drilling is targeting high grade gold mineralisation below the old Lobo copper mine and potentially converting the gold mineralisation to the resource inventory.
The West Drift target area is at least four times larger than the existing South West Breccia resource area immediately to its south.
Over 10 kilometres strike length of epithermal vein-breccia structures have been mapped at Lobo.
High grade gold shoots have been identified at South West Breccia, which hosts an Indicated Resource of 270,000 tonnes at 6.49g/t for 56,380 contained gold ounces and an Inferred Resource of 61,000 tonnes at 5.35g/t for 10,540 contained gold ounces.
Drilling by previous owners at the West Drift target indicates a target zone of greater than 400 metres strike length, with generally increasing gold grade with depth.
Red Mountain continues to firm up the high grade copper-gold potential of its Batangas Gold Project in the Philippines, validating its decision to acquire a 100% interest in the project last year.
Not only is this latest intersection coincident with the high grade gold intersection announced earlier this month, the copper grades are in line with the historic grades of 4% to 6%.
Red Mountain is also operating in a low cost region, where the company has good access and locations to construct a mill.
In the Philippines costs are estimated at around $60 million for a 500,000 tonne per annum mill with infrastructure compared to around $100 to $150 million plus in Australia.
Neil Warburton and Red Mountain have a three tier strategy:
- Convert low grade/high tonnage gold resources into higher grade near surface mineable reserves;
- Use existing infrastructure to fast track development; and
- Explore large landholdings and test multiple targets to establish long mine life.
Warburton is following a profitable path by ASX gold companies transitioning from explorer to producer. Think of CGA Mining's (ASX:CGX) Masbate project, OceanaGold Corporation's (ASX:OGC) Didipio copper gold project and Medusa Mining's (ASX:MML) Co-0 project.
Warburton was chief executive officer of Barminco Limited, one of Australia’s largest underground mining contractors.
Even at this early stage, Red Mountain is exhibiting hallmarks of Medusa Mining in certain respects. This augurs well for the share price potential and valuation of Red Mountain.
There are plenty of catalysts and "triggers" for the the valuation of just $8.4 million to move higher in coming months. We can foresee a share price of over $0.20.