Red River Resources Limited (ASX:RVR) has been maintained at a 'speculative buy' rating with a share target price of A$0.40 by Canaccord Genuity (TSX:CF, LSE:CF) after a quarter of solid production and financial gains.
Canaccord has highlighted the standout production results in the September quarter from RVR’s Thalanga copper-zinc-lead asset in north Queensland as well as lower basic cash costs per pound and a strong cash position in line with previous estimates.
The following is an edited excerpt from Canaccord Genuity’s flash update research report on Red River Resources Limited.
September quarter 2021 report
Thalanga was the stand-out asset, delivering solid production results across copper, zinc and lead. New information released today includes C1 (basic cash) costs of -US$0.37/pound, in line with (and indeed exceeding) Canaccord’s estimate at -US$0.35 pounds, which is lower than the June quarter due to increased copper and lead by-product credits.
Red River’s closing cash position of A$24 million mirrored Canaccord’s estimates exactly. The company’s Hillgrove JORC resource also increased 54% to over 1 million ounces contained gold.
Canaccord believes that potential positive near-term drilling results at Thalanga and Hillgrove (assays pending) could go some way to pointing to medium- to long-term upside.
Canaccord views the cash position growth as a positive turn for the company.
Thalanga
- Thalanga was the standout asset, delivering a solid production result and above reserve zinc equivalent grades to the plant during the quarter;
- C1 cash costs of -US$0.37/pound improved from -US$0.07/pound in the June Quarter and in line with our expectations;
- Drilling continued at Liontown during the quarter with 31 reverse circulation (RC) drilling holes and six diamond drill (DD) holes completed with assays pending; and
- Nearby ongoing drilling at Cougartown, Cougartown West and Max copper-gold prospects with 14 RC holes completed with assays pending.
Hillgrove
- Production was pre-released on October 12. Hillgrove sold 1,400 ounces of gold during the quarter;
- Hillgrove JORC resource increased 54% to more than 1 million ounces contained gold;
- Seven DD holes completed at Sunlight and Garibaldi during the quarter with assays pending; and
- RVR approved the mining and processing of Hillgrove's Syndicate resource with mining to commence in early 2022.
Cash flow and balance sheet
Cash increased A$5.1 million to A$24 million by end of the September quarter (Canaccord Genuity estimated $24 million) despite investing $6 million in mine development, project capital and ongoing exploration during the quarter.
About the companies
Red River Resources is seeking to build a multi-asset operating business focused on base and precious metals with the objective of delivering prosperity through lean and clever resource development.
The company’s foundation asset is the Thalanga Base Metal Operation in Queensland, where the production of copper, lead and zinc concentrate started in September 2017.
Red River has also started production at the high-grade Hillgrove Gold Operation in New South Wales, which was acquired in 2019, and is also a key part of its strategy to build a multi-asset operating business focused on base and precious metals.
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and all the companies and securities that are the subject of this report discussed herein.