Red River Resources says it is ready to strike when zinc prices improve, with a $17.2 million plan to bring North Queensland’s Thalanga operation back online.
The junior bought the polymetallic processing plant and surrounding tenements from failed miner Kagara’s administrators in 2014 and would kick off ore production at the West 45 site.
Managing director Mel Palancian said zinc prices were likely to rise to a level where Red River could contemplate restarting mining toward the end of 2016, based on current forecasts.
“When market sentiment improves we can respond quickly as Thalanga has the lowest capital cost, the shortest period to restart production and the lowest risk out of any zinc project in Australia or listed on the ASX,” he said.
Red River’s restart studies estimate an initial capital cost of $17.2 million and a forecast annual average production of 21,400 tonnes of zinc, 3600 tonnes of copper, 5000 tonnes of lead, 2000 oz of gold and 370,000 oz of silver in concentrate over an initial mine life of five years.
The restart would involve a small refurbishment program on established plant and infrastructure, mobilisation of the underground mining contractor and some preproduction capital development underground as well as first fills and spares.
“We are able to restart production within six months after raising the restart capital, however it doesn’t make sense to do this whilst commodity prices are low and capital is constrained,” Mr Palancian said.
“Karl Spaleck, our general manager, is keeping the Thalanga site on active care and maintenance while we wait to start.”
Mr Palancian said Red River had been attracted to Thalanga because the asset package included a number of already defined zinc-copper-lead resources, a fully permitted processing facility and a partially developed underground mine at West 45.
“Thalanga is exceptionally well located, some 65km south-west of Charters Towers and 6km off the Flinders Highway,” he said.
“There has been a long history of mining in the region, and there is a fantastic level of support within the local and regional communities for our plans to restart production at Thalanga.”
Red River expects to draw most of the 100-strong workforce required for Thalanga operations from Charters Towers and some from Townsville.
Meanwhile, the company has struck a $1 million deal which will see private company Etheridge Operations treat gold and silver-bearing stockpiles and tailings at the Thalanga project.
It also has an ongoing exploration program, with a diamond drill rig working the upper reaches of the Thalanga Far West orebody – where the company hopes to start a second underground mine.
Mr Palancian said the tenement package held great potential to extend the life of the Thalnga operation.
“We have more than 50 prospects in our project pipeline, and Tav Bates, our geology manager, is leading a team of geologists and geophysicists, who are seeking to turn a number of these prospects into the next generation of orebodies that will extend the operational life of Thalanga, and also unearthing many more prospects on our tenements,” Mr Palancian said.