Thalanga generates $20.9m revenue for Red River Resources, Hillgrove re-start planning underway

Red River Resources (ASX: RVR) generated $20.9 million in revenue for the September 2019 quarter, which was underpinned by zinc, lead and copper concentrate sales from its Thalanga mine in Queensland.

Located about 65km from Charters Towers in northern Queensland, Thalanga has been producing under Red River’s ownership since 2017.

Ore is currently sourced from the West 45 and Far West underground mines, with Red River planning to expand production to include the Liontown and Waterloo deposits.

During the September period, Red River processed 99,000t of ore from Thalanga, with an average grade of 0.5% copper, 1.8% lead, 3.6% zinc, 0.2 grams per tonne gold and 38g/t silver.

Most of the ore cam from West 45 upper levels, with activity at this mine due to be completed in Q2 FY 2020.

Concentrate produced was 6,199 dry metric tonnes of zinc, 2,016 DMT lead, 1,372 DMT copper.

Production was down across all three products compared to the June quarter with zinc decreasing 32%, lead falling by 40% and copper dropping by 24%.

Revenue from concentrate sales

For the September quarter, Red River sold 6,191 DMT zinc, 2,381 DMT lead, and 1,425 DMT copper.

The ore was delivered under long-term offtake agreements to Trafigura (zinc and lead) and Glencore (copper).

Total revenue from concentrate sales for the period amounted to $20.9 million, with Thalanga generating earnings before interest tax depreciation and amortisation of $3 million.

This left Red River with a cash balance at the end of September of $17.3 million plus $12.9 million-worth of cash back security bond deposits.

The company’s US$10 million working capital facility remains undrawn leaving Red River debt free.

Hillgrove gold mine

Red River added the Hillgrove gold mine to its asset portfolio during the September quarter.

The company payed $4 million worth of shares for the asset in late August.

Included in the acquisition was a 250,000tpa processing plant, site infrastructure including an assay lab, officer and a comprehensive underground and surface mining fleet.

Hillgrove also has a fully lined tailing storage facility with about two years’ left of capacity remaining.

The mine was placed on care and maintenance in 2016 due to low gold-antimony concentrate prices at the time.

Historical production at the mine exceeded 730,000oz of gold and 50,000t of antimony plus a tungsten by product.

Hillgrove has a current JORC resource of 2.8Mt at 5.1g/t gold and 1.7% antimony.

The acquisition was part of Red River’s strategy to build a multi-asset operating business focused on base and precious metals.

As part of its re-start strategy, Red River will carry out metallurgical test work on the project’s Bakers Creek waste dump.

Red River will also begin planning a gold-focused drilling program.

By late morning trade, shares in Red River were up 10% to $0.165.