Red River Resources aims to begin production at its Thalanga zinc project south-west of Charters Towers in the second half of 2017 after announcing a $30 million share placement arrangement.
Managing director Mel Palancian said the company intended to award the mining contract for the West 45 deposit shortly, with mobilisation to happen as soon as possible for preparatory work.
“We are very pleased to be fully funded for the development of, and imminent production from, the Thalanga zinc project,” Mr Palancian said.
“We have been watching the strong performance of the zinc, copper and lead prices, and the Board has taken the view that now is the right time to bring Thalanga back into production.
“We look forward to delivering this project in the most efficient way possible, and to generating strong cash flows.
“Our recent exploration results, including the discovery at our Liontown East prospect, have demonstrated the strong exploration potential across the Thalanga region. During the upcoming development and production phase we will continue to have a strong focus on exploration, focusing equally on extensions to known deposits as well as testing the deep pipeline of green fields targets.”
Refurbishment works at the 650ktpa Thalanga processing plant kicked off in November and will be accelerated with proceeds from Red River’s successful two-tranche share placement.
The company announced on Friday that it had received commitments to raise $30 million through the placement.
Those proceeds, in combination with the company’s cash balance of $10 million, will fully fund the restart of the Thalanga zinc project – which is expected to entail a capital cost of about $17.2 million, as well as providing a strong working capital balance.
The Thalanga zinc project restart is based on mining three deposits – West 45, Far West and Waterloo.
Mr Palancian said the proceeds of the placement would be used to accelerate the development of West 45, finalise the design and commence initial development of Far West and also commence activities at Waterloo.
Red River has recently engaged AMC Consultants to provide geotechnical design input and advice.
The company bought the Thalanga processing plant and surrounding tenements from failed miner Kagara’s administrators in 2014.
It anticipates an annual average production of 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 when production resumes.