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Red River Resources Limited

Red River Resources Ltd targets mill processing increases with systematic approach

Snapshot

The company will open a new underground mine this quarter after achieving record production levels.

Development work at Far West deposit where mining will start this quarter

Quick facts: Red River Resources Limited

Price: $0.17

Market: ASX
Market Cap: $84.76 m
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Red River Resources Ltd (ASX:RVR) (FRA:R1R) is systematically working towards its ambition to further increase the ore processed at its Thalanga mill in Queensland so it can reach full annual capacity of 650,000 tonnes.

The Perth-based company has its sights set on continued improvements at its Thalanga Operations this quarter after record production in the December quarter.

The base metals producer increased its production take at the Thalanga Operations during the September and December quarters of 2018, the company revealed a week ago.

Revenue in the September 2018 quarter from concentrate sales had been $16.3 million.

Red River’s total tonnes mined for Thalanga came solely from the West 45 deposit.

West 45 had a JORC-compliant ore reserve of 567,000 tonnes grading 11.6% zinc equivalent and a mineral resource estimate of 582,000 tonnes grading 15.45% zinc equivalent using a cut-off grade of 5% zinc equivalent, on December 20, 2017.

The north Queensland project is 65 kilometres southwest of Charters Towers.

READ: Red River Resources breaks quarterly operating records at Thalanga

Red River underwent a step change increase in production in the June 2018 quarter at Thalanga, increasing production by 19 tonnes, or 29.2%, to 84 tonnes a quarter during the period.

Ore processed was 95,000 tonnes for the December 2018 quarter and 187 tonnes for the December 2018 half-year to 187,000 tonnes — an annualised 374,000 tonnes which does not take into account expected future increases to production at the site.

Red River has previously said it hoped to take advantage of “high cyclical zinc prices and historically low zinc concentrate treatment charges”.

It expects additional tonnages to attract incremental processing cost increases.

During the quarter 7,695 tonnes of zinc concentrate were produced, along with 3,007 tonnes of lead concentrate and 725 tonnes of copper concentrate.

Copper recoveries continued to improve with 54.1% recovery to copper concentrate achieved for the three-month period.

An indication of this improvement was also evident in December’s 73.2% recovery to copper concentrate.

December quarter production statistics for Red River’s Thalanga Operations

December quarter production statistics for Red River’s Thalanga Operations

Thalanga consists of 7 million tonnes grading 2.5% copper, 3.7% lead, 11.7% zinc, 0.6 g/t gold and 98 g/t silver.

The project area is one of five held by the company over 610 square kilometres on the prospective Mt Windsor Belt, with the others being Liontown Waterloo, Highway Reward, Ermine and Trooper Creek.

Exploration at the five projects is authorised by 13 minerals exploration permits.

Another deposit in Red River’s landholding was previously discovered and mined like Thalanga — Highway Reward, a 3.8 million tonne deposit grading 6.2% copper and 1 g/t gold.

Red River’s achievements in the September 2018 quarter included a maiden JORC mineral resource estimate of 1.5 million tonnes grading 12.2% zinc equivalent for the Liontown East deposit and an increase in the Liontown project mineral resource to 3.6 million tonnes grading 10% zinc equivalent.

The company is also hoping to define mineable tonnes at Orient and incorporate these with Liontown Waterloo’s resources into its mine plan.

Red River’s corporate strategy is to ‘find more ore’ so it can reach the full capacity of its 650,000 tonnes a year plant at Thalanga.

The approach involves extending the life of known deposits, optimising cut-off grades, finding next-generation deposits at Thalanga and acquiring new projects or reaching strategic agreements with other project owners.

Red River’s focused exploration efforts are to use cutting edge technology and the latest exploration methodologies.

The company expect new project acquisitions and strategic agreements will help it process more ore through its plant.

READ: Red River Resources Limited has more strong base and precious metals results underground at Thalanga

Production of copper, lead and zinc concentrate started at the Thalanga mining operation in September 2017.

The company views the production restart at Thalanga as evidence of its strategic approach.

Red River wrote at its website: “Restart of production at Thalanga has demonstrated Red River’s focus and commitment to ‘deliver prosperity through lean and clever resource development’.

“We look forward to the continuing to deliver through finding more ore at Thalanga and growing Red River to become a multiple asset, mid-tier mining company.”

READ: Red River Resources lowers costs, increases earnings in September quarter

Red River managing director Mel Palancian said last week: “We are looking forward to continued improvements in the March quarter.”

The company plans to start production at its Far West deposit at Thalanga in the March 2019 quarter.

Red River’s March 2019 quarterly figures will be the first to include ore mined from outside the West 45 deposit as the company targets a 276,000 tonnes a year, or 74%, increase in ore processed at its plant.

Far West deposit has an estimated mine life of six years and a reserve of 1.5 million tonnes at 12% zinc equivalent.

READ: Red River Resources development at Far West on track to increase Thalanga production

The company advanced the decline of the Far West deposit in preparation last quarter, with further drilling early this year to target extensions to high-grade mineralisation.

Managing director Palancian highlighted continued improvements to mine production and processing plant efficiency in what will prove a prequel to the company’s quarterly activities report.

He wrote on behalf of the board: “RVR is focused on maximising returns from the operation by increasing plant throughput and extending mine life through increasing mineral resources and ore reserves at deposits currently in the mine plan (West 45, Far West and Liontown Waterloo).

Palancian reported the company also planned to convert “mineral resources into ore reserves at Liontown and Orient and … aggressively (explore) our growing pipeline of high-quality targets and projects.”

Red River’s full quarterly report is due by the end of January 2019.

READ: Red River Resources intersects high-grade gold and base metals between Liontown deposits

Red River breaks down its quarterly and half-year production figures into the gradings for copper, lead, zinc, gold silver and zinc equivalent.

Besides ore mined, the company tracks ore processed, zinc concentrate produced, lead concentrate produced and copper concentrate produced.

Financial results

In the September 2018 quarter, the company had concentrate sales revenue of $16.3 million, achieved with a 25% lower C1 cash cost of US 70 cents a pound of payable zinc metals.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of the Thalanga Operations underwent a turnaround, increasing by $1.7 million to $1.3 million dollars.

Red River ended the September quarter with $17.4 million cash and a further $8.8 million in cash-backed security bonds.

The company’s US$10 million working capital facility had not been drawn down.

— with John Miller

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