Red 5 will move the Darlot underground gold mine in Western Australia into a medium-term high-grade feed source for the King of the Hills (KOTH) processing plant as part of its strategy to drive down costs.
According to Red 5, the start of processing at KOTH in the June quarter allows for a cost-effective alternative to process Darlot’s ore.
This has been coined as the KOTH processing hub strategy and will make Darlot a high-grade satellite ore source for the plant.
The KOTH processing plant can produce up to 4.7 million tonnes per annum of ore without any additional capital expenditure.
Red 5 states that Darlot will also incur a 12-month underground mine development to reduce its reliance on remnant stopes.
The company is developing a workforce transition strategy for Darlot to transition the mine’s non-processing and mining personnel to KOTH.
Red 5’s production target for Darlot in the 2022 financial year is 62,000 ounces to 72,000 ounces at an all-in sustaining cost (AISC) of $2300 to $2400 per ounce.
The company aims to reduce the AISC to around $1700 to $1900 per ounce at Darlot by the 2023 financial year.
“Following an exhaustive review of the Darlot operation, we are pleased to announce a new streamlined mine production plan for Darlot, based on trucking and processing the ore at our new KOTH processing plant as part of what we are now referring to as our KOTH processing hub strategy,” Red 5 managing director Mark Williams said.
“Under this strategy, we are in effect reversing the original operating strategy developed when we undertook the dual acquisition of the Darlot and KOTH projects four years ago.”
According to Williams, the KOTH processing plant will have costs of $11.83 per tonne.
“With forecast processing costs of just $11.83 per tonne, the KOTH processing plant is a low-cost production centre and provides an opportunity to capitalise on this strategic advantage by trucking underground ore from Darlot to KOTH,” he said.
“The impact on our cost base gives us the flexibility to implement a more aggressive mine development plan to unlock the significant resource base at Darlot to reduce our dependency on remnant stopes.
“The metallurgy of the KOTH-Darlot ore blend is well understood as we have been processing these combined ores at Darlot for some years.
“This allows for the seamless integration of Darlot underground ore into our future milling and production plans at KOTH, providing an additional high-grade ore feed in the early phases of the production ramp-up.”