Red Eagle gets the cash to push ahead

Red Eagle Mining (RD-V) 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 57 million shares outstanding.

Red Eagle also agreed to sell a 2% net smelter royalty on future production from Santa Rosa to Liberty for $8.3 million.
But this new capital won’t be sitting in company coffers for long, as Red Eagle has already laid out its plan for a fourth drilling phase, 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 justify these investments. 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.

The 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 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, infill drill to 50-metre centres and test mineralization from the 250-metre level down to 500 metres. The 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 where the ecological Páramo zone flourishes — a key parameter in Colombia, as evidenced by Eco Oro Minerals’ (GSL-T) struggles.

Red Eagle plans to have its maiden resource estimate for Santa Rosa out by year-end, followed by a preliminary economic assessment in next year’s first quarter. 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. Carbon-in-leach recoveries are estimated at 95%.

Red Eagle’s management team is headed by Ian Slater, who serves as chairman and CEO. The 20-year mining veteran has been on a good run: another of his mining companies, Slater Mining (SLM-V), received a healthy boost to its market cap on the same day the Red Eagle financing was announced.

Slater Mining shares went from 12¢ to 27.5¢ in two days of trading, after filing a compliant technical report for its West Khazret gold project in Northern Kazakhstan.