ASX gold and resources miner Red 5 Limited's (ASX: RED) share price is up 3.81% in early afternoon trading today.
The company emerged from yesterday's trading halt after releasing the final feasibility study on its King of the Hills project in the Eastern Goldfields region of Western Australia.
Red 5's volatile share price year
After enjoying a stellar 2019, which saw the Red 5 share price soar in 12 months, 2020 has seen shareholders endure some sharp price swings in both directions.
Like most ASX shares, Red 5 was battered by the wider market selloff driven by COVID-19. From 24 February through 3 April, the Red 5 share price fell 50%. Since the April low, the share price has gained 83%, though by no means in a straight line higher.
Following today's gains, year-to-date Red 5's share price is right where it started 2020, at 33 cents per share.
In comparison, the All Ordinaries Index (ASX: XAO) is down 11% over that same time.
What did Red 5's final feasibility study reveal?
Red 5 said the final feasibility study at its King of the Hills project would usher in Australia's next major goldmine. It forecasts total life of mine (LOM) production of 2.5 million ounces at all in sustaining costs (ASIC) of AU$1,415 per ounce starting in 2022.
The company said it would take some steps before making a final investment decision in 'coming months'. These include early site works, acquiring the final permits and project financing, alongside major contract tenders.
The feasibility study indicated updated ore reserves of 64.6Mt @ 1.15g/t Au for 2.4M ounces of contained gold. Red 5 plans a processing rate of 4 million tons per year over the initial 16-year life of mine plan, with the first production scheduled for June quarter in 2022.
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 Goldfield.
Based on a gold price of AU$2,500 per ounce, Williams added:
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.
With the final investment decision on the mine yet to come, the Red 5 share price will be one to watch.
