Such is the life of a struggling base metals miner. I cut at a small loss more than a year ago (while acknowledging the best of luck for those that still hold that hopefully there will be a good outcome) after losing conviction on Mal Palanchian as an effective operator for RVR. I think the final straw was the lack of direction on Hillgrove and long term plans on base metal assets.

Recent announcement below:

On 30 November 2022, Red River Resources Limited (ASX: RVR) (Red River or Company) advised that Jeremy Nipps, Barry Wight and Thomas Birch were appointed as joint and several administrators of Red River and its wholly owned subsidiaries Hillgrove Mines Pty Ltd (owner and operator of the Hillgrove Gold Mine), Forth Resources Pty Ltd and Hebrides Resources Pty Ltd (Administrators) on 29 November 2022.

Red River notes that the decision to appoint the Administrators was a decision made by the directors of Red River (Directors) and not Trafigura Pte Ltd (Trafigura) due to the Directors’ concerns that Red River was either insolvent, or was likely to become insolvent at some future time, and that, as at today’s date, Trafigura has not sought to enforce its rights under the parent company guarantee issued by Red River in favour of Trafigura (Guarantee).

Further, while Trafigura did submit on 29 November 2022 an indicative non-binding term sheet outlining terms on which it was willing to consider providing forbearance of its claim under the Guarantee, the Directors believed this was not in a form capable of acceptance, or sufficiently advanced to be progressed to a form capable of acceptance, within the required timeframes to address the Directors’ concerns about the Company’s solvency.

This announcement has been drafted by the Red River Board and approved for release by Administrators. The Administrators’ investigations concerning the events leading to their appointment are continuing

Director resignation, which was released at the same time as a note about a strategic review and restarting mining at Hillgrove, which they have had some excellent

Currently trading at 13c, so a significant discount to earlier this year.

Haven't put the work in for any substantial analysis sorry.

Red River - Current market cap 120m. 

Executive Summary

Red River is a small, miner, developer, and explorer. They seem to have picked up a number of (distressed or end of life???) assets cheaply and are making a small mining operation out of these. They hold assets with resources in Silver, Gold, Indium, Antimony, Copper, Lead, and Zinc. 

Not posting a valuation as I'm not confident enough. This company seems like a bit of a bet on how long they can keep Thalanga running and continue adding value to their projects. They are quite excited by the Antimony reserves they have at the moment. To give a very highly questionable ballpark of what the company might be worth, if they were to achieve 38.5 mil profit (thinking potentially 35 mil for Thalanga and 3.5 mil for Hillgrove) for 4 years plus 18.5 mil for the next 6 at a dcr of 10% gives a market cap of 170 mil. 

I'm not quite sure how to treat their "42 mil underlying ebitda" and whether that is a realistic figure for coming profit." I do think there's the potential for a lot of upside here with the exploration happening. 

Worth noting the current excellent zinc and copper prices. 

In 20/21 their revenue split was (almost all from thalanga). 

Zinc - $42.9 mil

Lead - $10.1mil

Copper - $38.6 mil

Gold - $10.1 mil

Silver - $16.6 mil 

More detail in forum post. 

Questions

Is the royalty problem fully resolved yet?
Can reserves continue to be replaced at Thalanga? 

What is the expectation of grade and profit from the Hillgrove operation? 

How should I think about Depreciation and Amortisation with mining operations? I mostly need to exclude it, but keep in mind maintenance costs and the tax impact right?

01-Mar-2021:  Red River pours first gold at Hillgrove

Highlights:

• Red River completes commissioning of the Hillgrove gold plant and pours first bar of gold in more than 20 years at Hillgrove
• Plant production is ramping up; gold recovery to flotation gold concentrate and Knelson gravity gold concentrate performing in line with expectations
• Consep Acacia Leach Reactor installed - successfully treating gravity gold concentrates
• Red River has processed ~18,000 tonnes of ore from Bakers Creek Stockpile to date
• After initial low grade commissioning feed, stockpile grades meeting expectations, with an estimated 800 – 1,000 ounces of gold currently in circuit

--- click on the link for more ---

[I hold RVR shares.]

04-Jan-2021  RVR hits 2m @ 38.2 g/t Au & 2.1% Sb at Hillgrove Gold Mine

Highlights:

• RVR’s follow-up Eleanora drill program at the Hillgrove Gold Mine nearly complete
• Holes ELG146, ELG147 & ELG148 intersected broad intervals of high-grade gold-antimony mineralisation:
  • ELG147 includes the highest grade assay interval drilled to date by Red River at Hillgrove, intersecting 1.00m @ 57.2 g/t Au & 1.6% Sb from 188.00m downhole
  • ELG147 intersected 10.70m @ 8.6 g/t Au & 0.5% Sb from 180.6m down hole including 2.00m @ 38.2 g/t Au & 2.1% Sb from 188.00m downhole;
  • ELG146 intersected 9.15m @ 4.9 g/t Au & 1.1% Sb from 110.45m down hole including 4.00m @ 9.0 g/t Au & 2.4% Sb from 112.0m downhole;
  • ELG148 intersected 15.00m @ 7.7 g/t & 1.4% Sb from 156.0m down hole including 6.10m @ 13.9 g/t Au & 2.5% Sb from 157.00m down hole and including 1.10m @ 30.1g/t Au & 2.0% Sb from 162.0m downhole.
• ELG149 has been sent for assay, with ELG150 in progress and ELG151 remaining to drill
• On completion of ELG151, the drill rig will commence a four-hole program at Garabaldi Lode to support conversion of JORC 2004 Mineral Resource to JORC 2012 - part of a 23-hole (4,225m) drilling program underway at Hillgrove
• The Company has recently commenced production operations at Hillgrove (refer to ASX announcement 30/12/2020)

--- click on the link above for the full announcement ---

[I hold RVR shares]

24-Nov-2020:  Red River renews Trafigura offtake agreements

Highlights:

• Zinc concentrate offtake agreement renewed for 3 years from January 2021
• Lead concentrate offtake agreement renewed for 3 years from January 2021
• Trafigura provides new US$15 million working capital facility available to Red River and its affiliate Cromarty Resources Pty Ltd. The facility is available to Red River and Cromarty for general working capital, corporate and other specified purposes.

[I hold RVR shares.]

11-Nov-2020:  RVR defines extensive high-grade silver-indium system at Orient

Highlights:

• Sampling and mapping at Red River’s Orient Silver Project confirms extensive high-grade epithermal silver-lead-zinc mineralisation with associated large scale alteration systems
• Red River collected 44 samples from Orient West and 37 samples from Orient East
• Sampling at Orient West returned an average grade of 357 g/t Ag, 241 g/t In, 8.2% Pb & 5.8% Zn, with peak assays of 1,730 g/t Ag, 1,289 g/t In, 39.1% Pb & 32.1% Zn
• Sampling at Orient East returned an average grade of 240 g/t Ag, 88 g/t In, 5.9% Pb & 0.9% Zn, with peak assays of 1,365 g/t Ag, 444 g/t In, 25.8% Pb & 18.7% Zn
• High priority silver target confirmed at Orient East – previously tested by two holes, intersecting extensive silver-indium-lead-zinc mineralisation – never followed up
• Red River has commenced drill targeting, with aim to commence drilling after wet season.

--- click on the link above for the full report with pictures ---

[I hold RVR shares.]

06-Nov-2020:  RVR mines exceptional high-grade ore at Far West

Highlights:

• Exceptionally high-grade polymetallic ore intersected on 620 Level in Far West UG mine at Red River’s Thalanga Operation in Northern Queensland
• Cut 26 in the 620 Level Western Ore Drive intersected massive and semi massive sulphide ore
  • Face grade of 4.7m @ 4.9% Cu, 6.2% Pb, 22.0% Zn, 168 g/t Ag & 1.0 g/t Au (48.3% Zn Eq.)
• Cut 36 in the 620 Level Eastern Ore Drive intersected massive and semi massive sulphide ore
  • Face grade of 3.1m @ 3.5% Cu, 6.4% Pb, 12.7% Zn, 99 g/t Ag & 0.6 g/t Au (33.0% Zn Eq.)
• Both Cuts have been recently mined - Cut 26 (20 October 2020) and Cut 36 (30 October 2020)
• Consistent production from Far West is driving metal production, with Red River achieving record quarterly copper concentrate production in Q1FY21 of 4,073 dry metric tonnes

--- click on the link above for the full announcement, including photos and images/diagrams ---

[I hold RVR shares.]

About Red River Resources (ASX: RVR):  RVR 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. RVR’s foundation asset is the Thalanga Base Metal Operation in Northern Queensland, which was acquired in 2014 and where RVR commenced copper, lead and zinc concentrate production in September 2017. RVR has recently acquired the high-grade Hillgrove Gold Project in New South Wales, which will enable RVR to build a multi-asset operating business focused on base and precious metals. Gold production at Hillgrove is scheduled to restart at the end of CY2020.

RVR mines exceptional high-grade ore at Far West

Exceptionally high-grade polymetallic ore intersected on 620 Level in Far West UG mine at Red River’s Thalanga Operation in Northern Queensland

Cut 26 in the 620 Level Western Ore Drive intersected massive and semi massive sulphide ore - Face grade of 4.7m @ 4.9% Cu, 6.2% Pb, 22.0% Zn, 168 g/t Ag & 1.0 g/t Au (48.3% Zn Eq.)

Cut 36 in the 620 Level Eastern Ore Drive intersected massive and semi massive sulphide ore - Face grade of 3.1m @ 3.5% Cu, 6.4% Pb, 12.7% Zn, 99g/t Ag & 0.6g/t Au (33.0% ZnEq.)

Both Cuts have been recently mined - Cut 26 (20 October 2020) and Cut 36 (30 October 2020)
 

Consistent production from Far West is driving metal production, with Red River achieving record quarterly copper concentrate production in Q1FY21 of 4,073 dry metric tonnes

With Hillgrove coming online producing gold+antimony (antimony is a critical metal) early next year, plus the exploration going on in their projects that could potentially extend the mine life this still appears cheap.

Only just recently entered at 21c

22-Oct-2020:  Hillgrove Gold Project Restart Progress

Highlights:

• Site activities at Hillgrove continue to ramp up with the restart on track and budget for first gold production by year end
• Hillgrove Gold Project has low operating risk and capital cost using staged restart approach
• Stage 1: Gold production from Bakers Creek Stockpile
  • Production of gold doré estimated to start in December 2020
  • Focus on reprocessing Bakers Creek Stockpile (225,000 tonnes @ 2.5 g/t Au)
  • Estimated project capital cost of $5.0m
• Stage 2: Full Restart of Underground Mining Operations
  • UG mining operations forecast to commence mid to late 2021 in Metz Mining Centre
  • Metz Mining Centre has a JORC Mineral Resource of 3.0Mt @ 4.5 g/t Au & 1.4% Sb (6.5 g/t Au Eq.) (426koz Au & 41kt Sb contained)
  • Production of gold doré, gold concentrate and antimony-gold concentrate
  • RVR is aiming for Stage 2 operational life of +5 years producing 30,000-50,000oz gold equivalent p.a.
• Substantial upside for extended mine life and/or increased production rate from current JORC 2012 Mineral Resource of 5.0Mt @ 4.3 g/t Au & 1.5% Sb (6.4 g/t Au Eq.) (692koz Au & 75kt Sb contained)
• Potential for Eleanora as a second mining front and other targets at Hillgrove

--- click on the link above for the full announcement, with photos, charts and diagrams, including the Hillgrove Processing Plant Flowsheet ---

[I hold RVR shares.]

20-Aug-2020:  RVRs Isabel silver-indium project returns high-grade assays

[I hold RVR, primarily for the zinc and gold, but I won't knock back the silver and indium.  This is another company that have been picking up quality assets while prices have been low.]

28-7-2020:  Quarterly Activities and Cash Flow Report 30 June 2020

Quarter Highlights

• Mining and processing activities continue at Red River’s Thalanga Operation in Northern QLD and restart activities are progressing at its Hillgrove Gold Project in NSW.
• Thalanga Operations record quarterly copper concentrate production of 2,697 DMT (dry metric tonnes)
• A parcel of historic gold tailings from the Liontown Project was treated through the Thalanga Mill to produce 475 DMT of gold concentrate grading 62.3 g/t Au (gold), 197 g/t Ag (silver) and 12.8% Cu (copper)
• Thalanga Operations passed the milestone of milling 1.0Mt of ore since Red River restarted operations at the site in September 2017

Thalanga Operations

• Record quarterly copper concentrate production of 2,697 DMT
• Zinc concentrate production of 4,544 DMT
• Lead concentrate production of 1,133 DMT
• Gold concentrate production of 475 DMT
• Total Far West UG (underground) capital development of 1038.9m

Development Activities

• $3.3 million invested in capital development, primarily at Far West
• $0.2 million invested in exploration activities at Thalanga Operations
• Delivery of gravity gold concentrate circuit for Hillgrove Gold Mine Restart completed

Corporate

• $15.6 million revenue generated from concentrate sales
• C1 cost of US$ 0.30 per pound of payable zinc metal
• C2 cost of US$ 0.64 per pound of payable zinc metal
• C3 cost of US$ 0.86 per pound of payable zinc metal
• Thalanga Operations EBITDA of $3.5 million
• Cash balance of $8.1 million plus financial assets of $12.9 million (cash backed security bonds and deposits) as at 30 June 2020
• Red River repaid US$1 million during the quarter on the working capital facility, with the balance at quarter end reducing to US$5 million.

--- click on the link at the top for the full report ---

[I hold RVR shares]

23-Apr-2020:  Quarterly Activities and Cash Flow Report - March 2020

• Quarter Highlights 
  • Mining and processing activities continue at Red River’s Thalanga Operation in Northern QLD and restart activities are progressing at its Hillgrove Gold Project in NSW.
  • Liontown Mineral Resource increased to 2.6Mt @ 0.7% Cu, 1.6% Pb, 5.1% Zn, 1.4 g/t Au & 30 g/t Ag (12.4% Zn Eq.). The total Liontown Project Mineral Resource (Liontown & Liontown East) increased materially to 4.1Mt @ 0.6% Cu, 1.9% Pb, 5.9% Zn, 1.1 g/t Au & 29 g/t Ag (12.7% Zn Eq.).
  • Liontown to be the next (third) deposit developed by RVR at Thalanga – Liontown mining studies and design work underway.  
  • Randy McMahon appointed General Manager of Thalanga operations. Mr McMahon has 35 years’ underground operational and management experience in the global mining industry.  
  • Red River targeting restart of gold production at Hillgrove Gold Mine in 2020. Karl Spaleck (Operations Manager) will lead Hillgrove restart.  
  • Maiden JORC Mineral Resource of 225kt @ 2.5 g/t Au for Bakers Creek Stockpile at Hillgrove Gold Mine.
• Thalanga Operations
  • Record quarterly copper concentrate production of 2,310 DMT
  • Zinc concentrate production of 4,310 DMT  
  • Lead concentrate production of 1,117 DMT  
  • West 45 mine ceased production due to Ore Reserve depletion and was placed on care & maintenance.
• Development Activities
  • $3.7 million invested in capital development, primarily at Far West  
  • $0.5 million invested in exploration activities at Thalanga Operations
  • Metallurgical testwork for Hillgrove’s Bakers Creek gold stockpile demonstrated free gold and simple processing route
  • Acquisition of equipment (gravity gold concentrate circuit) for Hillgrove Gold Mine Restart commenced
• Corporate
  • $14.5 million revenue generated from concentrate sales  
  • C1 cost of US$ 0.73 per pound of payable zinc metal  
  • C2 cost of US$ 0.99 per pound of payable zinc metal  
  • C3 cost of US$ 1.21 per pound of payable zinc metal  
  • Thalanga Operations EBITDA of $(2.6) million
  • Cash balance of $12.7 million plus financial assets of $12.9 million (cash backed security bond deposits) as at 31 March 2020. An additional $1.6 million relating to March’s sale of copper concentrate was received subsequent to quarter’s end  
  • Red River drew US$6 million from the Company’s US$10 million working capital facility during the quarter. 

--- Click on link above for more ---

Disclosure:  I hold RVR shares.

Notes:

1. Zn=Zinc, Cu=Copper, Pb=Lead, Au=Gold, Ag=Silver.
2. Zn Eq = Zinc Equivalent.  The net smelter return zinc equivalent (Zn Eq.) calculation adjusts individual grades for all metals included in the metal equivalent calculation applying the following modifying factors: metallurgical recoveries, payability factors (concentrate treatment charges, refining charges, metal payment terms, net smelter return royalties and logistic costs) and metal prices in generating a zinc equivalent value for copper (Cu), lead (Pb), zinc (Zn), gold (Au) and silver (Ag). Red River has selected to report on a zinc equivalent basis, as zinc is the metal that contributes the most to the net smelter return zinc equivalent (Zn Eq.) calculation. It is the view of Red River Resources that all the metals used in the Zn Eq. formula are expected to be recovered and sold. 
3. Red River did not manage to make a profit from their Thalanga operation during the quarter.  They made a $2.6m EBITDA loss.  This was partly due to some grade and recovery issues which are explained further in this report (click on link at the top for the full report) but was mostly due to lower base metal prices, particularly zinc and copper.  RVR are firing up the old Hillgrove Gold Project in NSW this calendar year, which will provide them with more gold, and that should assist them to survive through until base metal prices rise again.  However, you still have to regard RVR as speculative at this point, because if commodity prices continue to decline and stay low for too long, they could struggle to survive.  They aren't in trouble yet, but they need higher zinc prices if they're going to thrive.  I like them for the zinc exposure, but I like them even more because they own the Hillgrove Gold Project.  I'm betting that the high gold price will carry them through until zinc prices rise again.  However, I could be wrong.
4. Cash Costs:  Costing Methodology, ( C1,C2,C3, M1 etc.):
   • C1:  Net Direct Cash Cost (C1) represents the cash cost incurred at each processing stage, from mining through to recoverable metal delivered to market, less net by-product credits (if any). The M1 margin is defined as metal price received minus C1.
   • C2:  Production Cost (C2) is the sum of net direct cash costs (C1) and depreciation, depletion and amortisation. The M2 margin is defined as metal price received minus C2.
   • C3:  Fully Allocated Cost (C3) is the sum of the operating cost (C2), indirect costs and net interest charges. The M3 margin is defined as metal price received minus C3.

17-Jan-2020:  Quarterly Activities and Cash Flow Report 31 December 2019

RVR dropped -20.7% on the day of that report (last Friday, from 14.5c to 11.5c), but have risen +8.7% (or 1 cent) today on the back of this announcement:  20-Jan-2020:  Red River hits 67% zinc equivalent at Liontown.  And they've had other positive announcements recently, including:

20-Dec-2019:  Red River hits high-grade gold and silver at Thalanga

06-Dec-2019:  High Grade Gold at Curry's Block

I have a smallish position in RVR.  It's larger than my NCZ position, but smaller than my position in S32 or SOL (who also both also own Australian zinc mines).  Keep the position sizes appropriate to the risks.  NCZ is the the highest risk (of going to zero).  RVR, while producing less zinc than the others at this point in time, are debt free with a cash balance of $11.9 million plus financial assets of $12.9 million (cash backed security bond deposits) as at 30 December 2019.  They also have a US$10m working capital facility that remains undrawn.  They also have lower costs than NCZ and high zinc grades at Thalanga.  RVR also have some promising gold, silver and antimony projects that they own, which may well result in them becoming a multi-commodity-producer in the future similar to what IGO did.  IGO went from being a zinc miner (predominantly) to now being a significant nickel miner with a 30% interest in the high-grade Tropicana gold mine.  Zinc prices were down 9% over 2019 and treatment (smelting) charges rose a LOT, making zinc barely profitable for a number of smaller players (and still unprofitable for some - like NCZ because of their higher costs), however RVR are doing OK.  Small, but doing well considering the headwinds they have faced.  Even if zinc falls further, they have that cash buffer and the undrawn working capital facility which provides a significant safety net for them.  And they're busy.  They are finding more high-grade zinc (as today's announcement highlights) and they have other projects that they are progressing.  I think RVR presents as a good risk/reward trade-off for me, and I've made a small investment in RVR shares (at 12.5c).