Red Eagle gets the cash to push ahead

Red Eagle Mining (RD-V) now has some deep pocketed investors believing in its ability to fast track its Santa Rosa gold project in Colombia into production.

The company has completed a $20 million equity raise with the principle buyers being Liberty Metals & Mining Holdings, a subsidiary of Liberty Mutual Insurance, and Appian Natural Resources, a mining-focused private equity firm.

Liberty took 11.4 million shares and gains a 19.9% stake in Red Eagle, while Appian bought 5.5 million shares and takes a 9.5% stake in the company which has a total of 57 million shares outstanding.

Connected to the deal, Red Eagle agreed to sell a 2% net smelter royalty on future production from Santa Rosa to Liberty for $8.3 million.

That new capital won’t be sitting in company coffers for long, as Red Eagle has already laid out its plan for a fourth phase of drilling, a resource estimate and a preliminary economic assessment, the last of which will be finished by early next year.

The latest drill results from Santa Rosa continue to justify such investment. Assays were released at the beginning of September that highlighted 47.4 metres with an average grade of 1.34 grams gold per tonne. Mineralization in the hole began at surface and was oxidized.

That result came out of the company’s third phase of drilling at the San Ramon gold system, which is located within the Santa Rosa project, which itself sits roughly 70-km north of Medellin in Colombia’s Antioquia department.

San Ramon has been defined over 1.8 km by 23,000 metres of drilling, which has also shown the system to extend from surface to a depth of 250 metres. The fourth phase of drilling will be made up of 17,000 metres and will infill drill to 50 metres centres and test mineralization from the 250 metres level down to 500 metres. That program is expected to get underway in the fourth quarter.

The project also benefits from being road accessible and below the 3,200 metre threshold above which the ecological Paramo zone flourishes — a key parameter in Colombia as Eco Oro’s (GSL-T) struggles attest to.

Red Eagle plans to have its maiden resource estimate for Santa Rosa out by the end of the year, followed by the completion of a preliminary economic assessment in the first quarter of next year. At this stage the company estimates that a heap leach pad would be able to attain 75% to 85% recoveries at a 0.5 inch crush. CIL recoveries are estimated at 95%.

Red Eagle’s management team is headed by Ian Slater who serves as chairman and chief executive. The twenty-year mining veteran has been on a good run lately, another of his mining company’s, Slater Mining (SLM-V), received a healthy boost to its market cap on the same day that the Red Eagle financing was announced.

Slater Mining shares went from 12¢ to 27.5¢ in just two days of trading after it filed a compliant technical report for its West Khazret Gold Project in Northern Kazakhstan.