SMS Finance

King of the Hills gold mine continues to show progress

Red 5 (ASX:RED) has announced impressive achievements, including record production and revenue, along with a decreased loss for the fiscal year ending in June, as its King of the Hills (KOTH) gold mine in Western Australia continues to show progress.

As previously detailed, the company achieved a record-breaking gold production of 165,544 ounces and gold sales totaling 164,974 ounces throughout the year ending June 30.

This production included 102,574 ounces from the KOTH mine in the first half of the fiscal year, which Red 5 noted was “at the upper end of guidance and within the mid-range for cost guidance at $1,837/ounce.”

The heightened production and sales contributed to a substantial 15% rise in revenue, reaching $422.7 million for the year. This growth resulted in an underlying EBITDA of $96.1 million, with a net loss after income tax of $8.7 million.

Red 5 provided insights into the sources of gold production, stating, “Gold was produced from the new King of the Hills (KOTH) Gold Mine in Western Australia, with ore feed sourced from the KOTH Open Pit mine, the KOTH Underground mine, and the Darlot Underground satellite mine, and processed at the new KOTH process plant.”

The efficient processing plant is now operating at an annualized throughput rate of up to 5.5 million tonnes per annum (Mtpa), surpassing the nameplate design of 4.0Mtpa by 37.5%.

Red 5 reported that the loss reflected the ramp-up of KOTH mining and processing activities during the initial half of the financial year, with commercial production officially declared on December 16, 2022.

The company noted a significant improvement in its net debt position, which enhanced by $56.6 million during the latter half of the year, resulting in a net debt of $81.9 million at the end of June.

Reaffirming its projections, the company stated its production guidance for 2023-24 ranges from 195,000 to 215,000 ounces, with an AISC (All-in Sustaining Cost) between $1,850 and $2,100 per ounce.

Expressing satisfaction with the full-year results, Red 5’s Managing Director, Mark Williams, expressed optimism: “This is a robust financial achievement for Red 5, reflecting the successful operational ramp-up at our newly established King of the Hills mining and processing hub during the first half of the fiscal year, and the strong performance we’ve maintained since commercial production was declared in December 2022.”

Williams continued, “Our three mining operations remain on course with the mine plan, and the processing plant’s exceptional performance above its nameplate capacity aligns Red 5 with our FY2024 production and cost guidance.”

He concluded, “Positive cash flow continues from our operations, and our objective is to expedite debt repayments in the coming year. This strategy will fortify the company’s balance sheet for future expansion, as we persist in unlocking the potential of our enduring King of the Hills mining operation.”

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