Red River Resources is taking advantage of the surge in the zinc price, which increased to a nine-year high recently.
The Melbourne-based company has secured a $30 million share placement to fund the restart of production at the Thalanga zinc mine in Queensland.
Red River has locked in commitments for the funds with the zinc price sitting about 85 per cent higher (at about US$2662 a tonne) than where it started the year.
According to Red River, the proceeds from the placement, combined with the company’s existing $10 million cash balance, will fund the $17.2 million needed for the restart, while also providing a strong working capital balance.
Red River expects to be producing zinc, copper, lead, gold and silver at Thalanga, which has been under care and maintenance since 2012, by the second half of next year.
The company has forecast annual production of 21,400 tonnes of zinc, 3600 tonnes copper, 5000 tonnes lead, 2000 ounces gold and 370,000 ounces silver over an initial five-year mine life. The restart will also create about 100 new jobs, Red River stated.
Commenting on the placement, Red River managing director Mel 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.
“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 focus on exploration, focussing equally on extensions to known deposits as well as testing the deep pipeline of green field targets.”
Red River has received commitments to raise the funds through a two-tranche placement of 162.1 million shares, priced at 18.5 cents a share. The first tranche comprises 76.1 million shares, while the remaining balance will be placed subject to shareholder approval.