It’s alive! Red River’s zinc mine comes back from the dead
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With the zinc price hitting 10-year highs, it couldn’t be a better time for Red River Resources to bring its Thalanga zinc project in Queensland back to life after five years on the slab.
The Melbourne-based company (ASX:RVR) today announced the restart of copper, lead and zinc concentrate production on September 8, ahead of the planned fourth quarter 2017 start date.
The stock gained 2c to close at 26c with 2.3 million changing hands by market close.
Red River began Thalanga plant and site rehabilitation and restart activities in January. Full commissioning began at the start of September and the first ore was fed into the circuit on September 6.
Meantime, Red River is working to increase its resource base at Thalanga, with plans to mine the Thalanga Far West and Waterloo deposits after the West 45 deposit, while defining a resource at the Liontown East discovery and undertaking regional exploration to discover the next generation of deposits in the area.
Red River, which has no debt and had a cash balance of $19.5 million at end of August, has a sales deal with Trafigura for zinc and lead concentrates and another sales deal with Glencore International for copper concentrate for the first three years of production.
The original Thalanga deposit was discovered in the late 1970s and is a volcanic hosted massive sulphide (VHMS) deposit. It is the largest of the known VHMS deposits that have been discovered to date in the Cambro-Ordovician Mt Windsor Volcanic belt.
In 2012, operations were placed on care & maintenance by then owner Kagara before the company went into administration.
Red River then picked up the project in 2014 and in November 2015 released a study that assessed the potential re-start of the project.
The study demonstrated the highly attractive nature of the Project with a low operating cost, low pre-production capital cost of $17.2 million and a short timeline to production of six months.
Annual average production is 21,400 tonnes of zinc, 3600 tonnes of copper, 5000 tonnes of lead, 2000 ounces of gold and 370,000 ounces of silver in concentrate over an initial mine life of five years.
The Thalanga mill has a current annual treatment capacity of 650,000 per annum ore, and can produce separate copper, lead and zinc concentrates.
Zinc, a silvery white metal used mainly in galvanization of steel and iron, has been trading at its highest levels since 2006 when the price soared above $US4500 per tonne.
Over the past month, the LME zinc price has jumped over 11 per cent to $US3080 per tonne on Friday as demand increased in China and the US and inventories dried up.