RED 5 LIMITED - ASX: RED

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Description

Red 5 Limited (ABN 73 068 647 610) is listed on the Australian Securities Exchange (ticker RED) with over 2,600 shareholders. The largest shareholders are Mathews Capital, with a 19.2% interest, and Baker Steel Capital Managers with 6.6% interest. There are also 31 institutions, mainly Melbourne and Sydney based, on the register. The Company’s principal asset is the Siana Gold Project in the Philippines held under a Mineral Production Sharing Agreement by a Red5 Philippine compliant company. The second asset is the Mapawa MPSA, 30km north of Siana which has the potential to provide satellite ore to the Siana development. The property is also prospective for a goldporphyry discovery.

SIANA GOLD PROJECT DEVELOPMENT

The Siana development comprises an open pit operation followed by an underground mine, with ore treated through a conventional modern gravity and carbon-in-leach plant to produce gold dore. The project, over a ten year life is expected to deliver 849,000 ounces of gold production at a cash cost of US$351 per ounce. The Siana orebody remains open below 400 metres vertical. Site construction commenced in June 2010 with the mine access road, the administration building and the de-watering bores. All major equipment items have been ordered.

The project is on schedule for a first gold pour in April 2011. The open pit life-of-mine contract has been awarded to Delta Earthmoving of the Philippines and the EPCM contract to TWP Australia. Pit dewatering equipment and a new 2.8MW 6.1 metre by 4.2 metre mill (35 week delivery) have been ordered.

The total capital cost to first gold pour (comprising plant and infrastructure with contingency, overrun account and conservative working capital allowance) is US$80 million. The Company treasury position, at 30 June 2010, is $56.7 million, of which US$38 million will be allocated to the project. The Company has mandated Deutsche Bank/Ashmore Group to provide the balance, by way of a US$25 million interest only loan and a US$15 million gold pre-pay.

The Ore Reserve is estimated to 400 metres vertical and the Mineral Resource to 500 metres vertical. The orbody remains open at depth and to the north and south. Not included in the Resource data base is SMDD 135 intersection 3 metres at 31.6 g/t gold at 220 metres vertical and accessible from early underground development, and SMDD134 intersection 5 metres at 25.4 g/t gold, 48 g/t silver and 2.4% zinc – the deepest northern orebody intercept. The open pit Mineral Resource was estimated by Hellman & Schofield Pty Ltd using the method of Multiple Indicator Kriging with block support correction. The underground Mineral Resource was estimated by Cube Consulting Pty Ltd using upper grade cuts of 30 g/t gold for the major tonnage Panels 1 to 3. No upper grade cuts were necessary for Panels 4 to 10. The open pit and underground Reserve cut-off grades are 1.1 g/t and 3.0 g/t respectively.

Production from known resources is forecast to reach 849,000 ounces over a ten year operating mine life at a cash cost of US$351 per ounce. An open pit to a maximum depth of 215 metres below surface will be established following dewatering of the 8.2Gl of clean water in the existing pit. Benches will be blasted on 5 metre lifts and excavated on 2.5 metre lifts using Komatsu PC800 excavators and Komatsu MD440 six wheel drive 40 tonne articulated trucks. The open pit will operate for four and a half years. An underground portal, 75 metres above the final pit floor will be established at the beginning of the third year of operations. The decline will be a 5 metre by 5 metre heading and a 1:7 gradient. The underground mining method will see jumbo drill and blast for the decline and road headers for ore production using underhand cut and fill. A paste fill, comprising cycloned tailings and local cement, will be used for ground support.

Mapawa Project

Mineral Production Sharing Agreement (MPSA) 280-2009-XIII over the Mapawa area, located 30 kilometres north of the company’s Siana Gold Project in the Philippines was awarded in May 2009. Gold mineralisation has been intersected in historic drilling by former mine operator Suricon at the ‘LSY’ prospect, with indications of target mineralisation of approximately three to four million tonnes, commencing at surface. An extensive porphyry style exploration target has been defined from electrical geophysical surveys surrounding the ‘LSY’ prospect.

The intrusive at LSY is superficially similar to diorites intersected below the Siana deposit, and at the Madja prospect, six kilometres to the south, supporting the overall prospectivity of the Surigao del Norte region for the discovery of additional porphyry copper-gold deposits.

The first hole, MDD001, at the LSY prospect at Mapawa intersected an altered diorite intrusive rock type - a typical host to porphyry systems in the Philippines and the Pacific Rim. The hole was extended by 100 metres beyond the original plan to a final depth of 546 metres (down-hole depth) due to the continuing favourable geology. At a 0.3 g/t gold equivalent cut-off grade, an intersection of 319 metres at 0.7 g/t gold, 1.6 g/t silver and 0.13% copper was recorded from 227 metres. Within this was an intersection, at a 0.5g/t gold equivalent cut-off, of 189 metres at 1.0 g/t gold, 1.7 g/t silver and 0.17% copper.

The MDD001 gold-silver-copper intersection is located approximately 400 metres vertically below a continuous surface channel sample returning 83 metres at 1.8g/t gold. MDD001 was terminated in diorite porphyry at grades above 0.3g/t gold. The third hole, MDD003 targeting 200 meters below the MDD001 intersection, recorded a 60% increase in gold mineralisation with a 254 metre intersection at 1.2g/t abd 0.16% copper.

Observations from both holes would appear to confirm the dipole-dipole Induced Polarisation modelling which identified an anomaly averaging 0.9km in diameter at chargeability levels typical of porphyry copper-gold deposits.

Porphyries in the Asia region include Newmont operated Batu Hijau mine in Indonesia (published information – reserves 563Mt at 0.27 g/t gold and 0.40% copper, 2009 Production was 550,000 ounces of gold at US$214 per ounce and 498M lbs of copper at US62 cents per lb.) and the Newcrest declared Cadia East Underground project (published information – reserves 961Mt at 0.61 g/t gold and 0.33% copper). A 7% Interest in Batu Hijau (the 2009 divestment requirement) was sold last month for US$247M.

Montague Joint Venture (Gold)

The Company has a 25% free carried interest to feasibility in the Montague Joint Venture, located 80km NNE of Sandstone, Western Australia, in the Archaean Gum Creek Greenstone Belt. The project is managed by Gateway Mining NL (ASX code: GML).

The Red 5 tenements cover a seven kilometre northern extension of the stratigraphy and structures that host Gateway’s high-grade gold discovery at the Airport Prospect.

Aeromagnetic images of the concealed greenstone stratigraphy in the project area closely resemble the overall structural form of the famous Golden Mile in the Kalgoorlie-Boulder goldfield. Similar Archaean age geological architecture can also be observed in other highly endowed gold districts, such as at Timmins in the Abitibi Greenstone Belt of southern Ontario.

Prospectivity at Montague is rated as high, based on the above observation, a lack of effective historic exploration beneath widespread transported cover, and strong geochemical and geophysical results achieved to date.

Further encouraging results were achieved during 2003 with completion of rotary air blast (RAB) drilling (37 holes for 1,854 metres) at the Victory Creek and Hypotenuse prospects.

At Victory Creek the drilling closed off an arsenic geochemical anomaly to the north, but extended it a further 600 metres to the east. The mineralised zone at Victory Creek has no surface expression, and is characterised by intense, widespread alteration indicative of a potentially large mineralised system.

At Hypotenuse, located two kilometres south-west of Victory Creek, limited drilling on 100 metre spaced lines tested an arsenic-gold geochemical corridor. Results included widespread arsenic anomalies to 1,637ppm and gold to 0.11g/t, associated with ferruginous quartz veining within metavolcanic- sedimentary host rocks. Hypotenuse is located on a five kilometre long shear zone that is up to 60 metres wide and concealed beneath 5 to 30 metres of transported cover. As is the case at Victory Creek, this zone has undergone minimal previous exploration.

Further deep RC drilling is planned at both prospects.

Mine For

copper, gold, silver

Location of operation(s)

Philippines, Western Australia

Address

Level 2 , 35 Ventnor Avenue
WEST PERTH, WA, AUSTRALIA

Phone

(08) 9322 4455

Email

Website

http://www.red5limited.com

Last Updated

10/02/2011