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Red River Resources options converted as shares rise on zinc exposure

Published: 11:00 06 Jan 2017 AEDT

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Red River is in the process of restarting the Thalanga Zinc Project.

Red River Resources (ASX:RVR) has received a vote of confidence from its board of directors who have exercised 1.5 million options providing the company with $225,000.

The company’s shares have performed strongly over the past 12 months, up 200% to $0.24, thanks to its zinc exposure through the Thalanga Project located in central Queensland.

Red River is in the process of restarting the Thalanga Zinc Project, which is based on mining three deposits, West 45, Far West and Waterloo.

The proceeds of the recent $30 million placement will 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 is also fully funded to aggressively continue its infill drilling and Thalanga high impact exploration program.


Zinc market

In recent months, zinc has touched an eight year high, trading over US$2,800 per tonne.

Zinc was one of the top performing commodities in 2016 gaining 60% as the markets supply/demand balance has tightened dramatically.

Refined zinc metal usage increased in 2016 at the same time that supply cutbacks caused a drop in production.

Even with the zinc price rally in 2016, major zinc miners such as Glencore are expected to proceed cautiously with any attempt to ramp up mine production.

While cutbacks in production have lowered the metal’s supply, an increase in demand has also been a contributing factor to the price rise.

In 2016, China’s increased infrastructure spending boosted demand for the metal used in galvanising steel.

Expectations are that China’s infrastructure spending will continue through the first-half of 2017.


Next steps

Upcoming catalysts include:

- Finalise management team: Q1 2017;
- Concentrate offtake agreement: Q1 2017;
- Appointment of mining contractor: Q1 2017;
- Mobilisation of plant refurbishment contractors: Q1 2017;
- Plant refurbishment completed: Q3 2017; and
- Commencement of production: 2H 2017.

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