Red River Resources Secures Zinc and Lead Offtake Agreements

THE BOURSE WHISPERER: Red River Resources (ASX: RVR) has finalised offtake agreements for zinc and lead concentrates to be produced from the company’s Thalanga zinc project, located in Northern Queensland.

Red River said the agreement had been struck between its wholly-owned subsidiary Cromarty Resources and Trafigura Pte Ltd.

The Offtake agreements are fixed tonnage contracts, with tonnage anticipated to be produced during the first three year period from the commencement of commercial production, and are structured to help minimise Red River’s working capital requirements.

Cromarty has also entered into a facility agreement with Trafigura, pursuant to which Trafigura will make available up to US$10 million to assist, if required, with the costs of production and general working capital expenses.

The Offtake agreements are in respect of 122,000 dry metric tons of zinc concentrate and 27,400 dry metric tons of lead concentrate, with pricing to be determined by reference to applicable metal prices on the London Metal Exchange at the time of shipment, with tonnage expected to be shipped in the first 36 months following commencement of commercial production.

Under the terms of the agreements, zinc and lead concentrates will be trucked approximately 200 kilometres to the Port of Townsville, for onward delivery to customers.

“The execution of zinc and lead concentrate offtake agreements with Trafigura is the culmination of a competitive process involving a number of leading trading and smelting companies,” Red River Resources managing director Mel Palancian said in the company’s announcement to the Australian Securities Exchange.

“The highly competitive nature of the process has allowed us to obtain outstanding offtake terms for both zinc and lead concentrates which will contribute to the success of Thalanga.

“We look forward to building on our close working relationship with Trafigura as we complete the process of bringing the Thalanga zinc project back into production, which we are on budget and on schedule to achieve in 4Q CY2017.”