Gold aspirant Red 5 has snapped up a pair of operations for $34.5 million to set up its growth strategy in the Eastern Goldfields of Western Australia.
Perth-based Red 5 has secured agreements to acquire the Darlot gold mine from South Africa’s Gold Fields for $18.5 million and the King of the Hills gold project from Saracen Mineral Holdings for $16 million.
The acquisitions will provide Red 5 with an extensive strategic footprint in the Leonora-Leinster mineral district of WA, it said in an ASX announcement.
Red 5 plans to leverage this position by pursuing a regional consolidation strategy aimed at establishing the Darlot mill as a central processing hub.
Managing director Mark Williams said the Darlot gold mine, which Gold Fields acquired from Barrick in 2013, would be the cornerstone of the company’s growth strategy.
Acquiring the Darlot mine will allow Red 5 to transition immediately back into gold production where its operational experience and capabilities can be leveraged, Williams added.
“Darlot has produced over 2.7 million ounces of gold over its 28-year history but, like many large gold systems in WA’s Eastern Goldfields, offers a vast amount of growth and upside potential,” Williams said.
“Our immediate focus will be to optimise the existing mining operation and evaluate the opportunities that exist to extend the life well beyond the current defined ore reserves.
The Darlot mine has produced more than 241,000 ounces of gold in the past three years.
Williams continued: “In parallel with this, we will immediately begin work to examine development options for our second key project, the King of the Hills project, which we are acquiring from Saracen Minerals.
“This is a strategic asset which we believe can be enhanced due to its proximity to Darlot as a central processing hub, its grade, and the extensive studies and trial mining activities already completed by Saracen.”
Red 5 will acquire both operations in stages through a combination of cash and shares. The deal is expected to be completed by September 30.