Red 5 Announces KOTH Final Feasibility Study Delivers 2.4Moz Reserve and NPV of A$1.10Bn

FFS will result in the development of Australia’s next major gold mine, with forecast total LOM production of 2.5Moz at an AISC of A$1,415/oz from 2022. Next steps are early site works, final permitting, major contract tenders and project financing before a final investment decision, planned in the coming months.

• Final Feasibility Study (FFS) approved for a proposed new 4Mtpa bulk mining and processing operation at the King of the Hills (KOTH) Gold Project, located in the Eastern Goldfields region of Western Australia.
• Updated Ore Reserve of 64.6Mt @ 1.15g/t Au for 2.4M ounces of contained gold.
• Initial 16-year Life of Mine Plan (LOM Plan) at the planned processing rate of 4Mtpa with key physical
parameters including:
• Initial 16-year operation mining 63.7Mt @ 1.24g/t gold for total production of 2.5M ounces of contained gold;
• Ore Reserves comprise 96% of mining inventory, with 4% of Inferred Resources in the LOM Plan;
• Gold production in Years 1-6 averaging 176koz pa @ 1.46g/t (LOM average production of 146koz pa @ 1.24g/t);
• All-in-sustaining costs (AISC) of A$1,339/oz of gold sold in Years 1-6 (LOM AISC of A$1,415/oz);
• First production scheduled for June Quarter 2022, with three months of mine pre-strip; and
• Peak annual gold production of 203koz in FY24, benefiting from underground mining of 1Mtpa in Years 1-4.
• FFS delivers strong financial returns (based on LOM Plan), including (at a gold price of A$2,500/oz):
• Undiscounted free cash flows of A$2.27Bn, pre-tax (A$1.54Bn post-tax);
• NPV (at an 8% discount rate) of A$1.10Bn, pre-tax (A$726M post-tax);
• Capital payback period of 25 months;
• Pre-tax IRR of 64.3%; and
• Project capital of A$226 million.
• Upside potential beyond the FFS includes:
• Extending underground mining beyond FY27 as development progresses, allowing installation of adequate drill platforms to support completion of extensional drilling;
• Tendering of mine services contracts to achieve the most competitively priced outcome; and
• Future expansion in processing capacity with a 6Mtpa crushing circuit and oversized mill included in the capital cost and design allowance made for future upgrades to the capacity of the grinding,
leaching and elution components with minimal production interruption and low capital expense.

• Clear delivery pathway includes:
• Orders placed for 6Mtpa gyratory crusher and 4Mtpa SAG mill;
• Contract awarded for construction of the village accommodation and central facilities;
• Savings of over $6M compared with the FFS capital allowance identified to date;
• Project implementation planning and appointment of EPC contractor in December Quarter 2020;
• Regulatory Stage 1 approvals for the commencement of the village accommodation and associated infrastructure construction are in place. Stage 2 approval applications for the Processing Plant,
Mine Services Area and initial Tailings capacity have been lodged and are expected to be received within the December Quarter 2020; and,
• Project debt financing processes have commenced, targeting A$165m of project debt.

Red 5’s Managing Director, Mark Williams, said: “The completion of this high-quality Final Feasibility Study,delivering a 2.4 million ounce Ore Reserve, is a pivotal moment for Red 5 shareholders, for our hard-working team and for communities in the Leonora-Leinster region of the Eastern Goldfields. It firmly places KOTH as one of thelargest endowed gold mines in Australia.
“The FFS has confirmed the technical and financial viability of a major new 4Mtpa mining and processing operation at King of the Hills, with optionality to expand to 6Mtpa in the future.
“The FFS details the construction of a stand-alone CIL processing facility on-site that will be fed initially by a combination of ore from both open pit and underground mining operations. This will form the engine room of a significant new Australian gold mine delivering total production of 2.5 million ounces over an initial 16-year mine.
“Based on a A$2,500/oz gold price, the planned KOTH operations will deliver outstanding financial returns with a $1,101 million pre-tax NPV8% and a 64% Internal Rate of Return. With strong production in the early years of the mine, the Project is well placed to benefit from the favourable gold price environment – with a capital payback period estimated at 25 months for the Project’s capital requirement of A$226 million.
“There are opportunities to improve further on the base case outlined in the FFS by optimising mining costs in the contract tendering process, extending the mine life through further underground and surface exploration success”.

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