Paul Garvey -
http://www.miningnews.net/StoryView.asp?StoryID=62613
Wednesday, 26 July 2006

SHARES in Philippine-focused gold developer Red 5 have soared more than 60% this morning, following a record intercept from the company’s Siana deposit that has thrown open the possibility of an underground extension to the project.

The company this morning announced an intercept of 144m of mineralisation grading 5.8 grams per tonne gold and 10.4gpt silver from 398m depth in hole SMDD105, the northernmost hole drilled at that depth at Siana to date.

The result from the project, which is currently subject to an openpit feasibility study, propelled Red 5 shares up 5.4c (62.8%) to 15.5c this morning Red 5 exploration director Lance Govey told MiningNews.net that based on the intercept, the company could potentially add around 300,000 ounces of gold to the project, should future drilling replicate today’s success.

Govey said the intercept contained occurrences of visible gold, which is unusual for ineralisation at Siana. Using an upper cut-off grade of 75gpt gold, the intercept had an average gold grade of 4.8gpt.

Govey said two more deeper drill holes targeting around 100m below the latest intercept will be drilled shortly to test for further deep extensions.

In addition, the company said it had secured a second-hand ball mill and rolls crusher suitable for the Siana ore types, a development that was likely to reduce the project’s lead time by up to a year.

Govey said that after purchasing and refurbishment costs, the price of the second-hand equipment would be on par to purchasing brand new equipment. However, with delivery time of new ball mills currently estimated at 76 weeks, Govey said the purchases would allow the company to bring Siana into production substantially sooner.

According to Red 5, the equipment purchased had the capacity to handle at least 50% more tonnage throughput than currently included in the mine plan.

The company said it expected various studies underway as part of the bankable feasibility study to be wrapped up by October.

The BFS is investigating the development of a 750,000 tonne per annum opencut operation at Siana producing 344,000oz of gold and 349,000oz of silver over an 86-month mine life at a cash cost of $US253 per ounce. A pre-feasibility study completed earlier this year estimated the
project’s development costs at $US44.5 million ($A58.9 million).

The company said banking discussions would now accelerate.

In a statement issued today, Red 5 managing director Greg Edwards, who is presently in the Philippines, said the company had stepped up all aspects of the BFS with the objective on first gold production in the first quarter of 2008 at the latest.