Shares in West Perth-based explorer Red Mountain Mining are trading higher after the company released a scoping study confirming low capital costs at its Batangas gold project in the Philippines.
The study put capital costs for the project at $16.7 million, which the company said could potentially be paid back within just 14 months.
Cash operating costs are forecast to come in at $769 per ounce, with production of 90,000oz of gold expected over a four and a half year initial mine life.
The study projects life of mine revenue from gold sales of $134 million, although this assumes that the gold price remains at its current level of about $1,500/oz.
Red Mountain anticipates the operation will require about 232 workers, with accommodation for the workforce to be hosted in the nearby Lobo township.
The company will now proceed to a definitive feasibility study, which is expected to be completed by the end of this year.
"The results from the scoping study are very positive for us," Red Mountain managing director Jon Dugdale said.
"It shows we can establish the project relatively quickly, generate early cashflow and pay back the up-front capital within a short timeframe based only on known existing resources.
"We'll continue our exploration drilling campaign testing high grade targets at the Lobo prospect and anything we find there could improve the bottom line even further."
Red Mountain shares were trading almost 12 per cent higher at 1.9 cents at 12:03pm WST.
