Red 5 has sold the Siana gold project in the Philippines to TVI Resource Development for $US19 million ($26.2 million) due to its focus on gold developments in Australia.
Aside from the cash payment, the transaction involves a net smelter return royalty of 3.25 per cent payable for up to 619,000 ounces of gold, which has an additional value of $US36 million when based on a $US1800 per ounce gold price.
TVI Resource Development is a Philippine subsidiary of TVI Pacific, which has gold, nickel and copper assets in the Philippines.
According to Red 5, TVI will fund the restart of Siana through existing cash flows and debt funding if required, with a targeted restart in the first half of 2023.
Red 5 placed Siana on care and maintenance in May 2017 due to regulatory issues.
“The company has had a long history in the Philippines as a gold explorer, developer and ultimately, successful operator of the Siana gold project for a number of years through its Philippines affiliates and partners,” Red 5 managing director Mark Williams said.
“Following the challenges we experienced in the 2017 financial year, mining operations at Siana were suspended and we have since successfully pivoted to Australia through our dual acquisition of the Darlot and King of the Hills gold mines, which was completed in October 2017.
“We are now well established on our growth trajectory in the Australian gold sector with the construction of the King of the Hills gold mine now in full swing and first gold production on track for the June quarter 2022, complementing our nearby existing production base at Darlot.”
Red 5 is headstrong on becoming a mid-tier Australian gold producer through its King of the Hills and Darlot gold mines in Western Australia.
“From a Red 5 perspective, the transaction streamlines our portfolio, removes the annual holding cost of approximately $6 million and crystallises a combination of cash value for our shareholders, while maintaining future exposure to the upside at Siana via a capped net smelter return royalty of 3.25 per cent,” Williams said.