Shares in WA gold producer Red 5 have soared on the back of a bulk mineral resource estimate for the newly identified Eastern Margin Contact at the King of the Hills project in the northern Goldfields.

The company revealed this morning it had identified an indicated and inferred resource of 28.7 million tonnes at 2 grams per tonne for an estimated 1.88 million ounces of contained gold adjacent to existing mining areas at the site just north of Leonora.

A strategic review is now under way to evaluate the economics of a bulk underground and/or open pit mining and standalone processing operations.

Red 5’s shares ended the day up 1.1c, or 15.7 per cent, at 8.1c.

Managing Director Mark Williams said it was a “game-changer” for Red 5, which completed its purchase of the King of the Hills project from Saracen Mineral Holding in October last year 

“Based on the drilling completed to date and assessing only a portion of the broader granodiorite contact zone, the size and scale of this resource gives us more confidence that King of the Hills can ultimately support a large-scale bulk mining operation,” he said.

“Given the strength of this early result, we’re now under way with preliminary studies to assess the merits of a standalone mining and processing operation.

“In addition, we have multiple high-priority targets along the contact zone that offer strong potential to rapidly expand this resource. These targets will be assessed along with the recently commenced 30,000m drilling program, with additional surface drilling on the high priority north-western corner of the contact.”

Red 5, which also owns the nearby Darlot gold mine, said existing infrastructure already on site at King of the Hills, including extensive offices and workshops, could be recommissioned to support a new processing facility.