High grade zinc assays delineated by Red River Resources

By Trevor Hoey. Published at Jan 17, 2017, in Small Caps

Emerging zinc producer, Red River Resources (ASX:RVR) has announced further high-grade assay results from its Thalanga Far West project, part of a thick high-grade deposit which is expected to be the second mined after West 45 as management prepares to commence production at Thalanga in the second half of 2017.

Exploration results released today included intersections of 14.8 metres and 20 metres grading 28.1% and 17.3% zinc equivalent respectively

The Thalanga project was acquired from Kagara Zinc in July 2014, prompting a doubling in Red River’s share price to circa 10 cents with the company going on to trade as high as 29.5 cents on the back of promising exploration results.

Red River’s share price trailed off in 2015, but following further exploration success, clarity regarding recommencement of production and a surge in the zinc price its shares hit a high of 27.5 cents in August 2016.

Should management meet its production commencement goal of the second half of 2017, Thalanga will be the next new zinc project to come into production in Australia.

Analysts at Hartley’s last ran the ruler across the stock in November saying, “Red River Resources remains a compelling investment opportunity with multiple near-term catalyst for share price appreciation”.

The broker has a speculative buy recommendation on the stock with a price target of 44 cents, implying significant upside to the company’s current trading range.

Hartley’s is forecasting maiden zinc equivalent production in fiscal 2018 of 15,700 tonnes, more than doubling to 33.4 million tonnes in fiscal 2019.

Using a zinc price of US$1.13 per pound (spot: US$1.24 per pound) and an AUD:USD exchange rate of US$0.72 (spot: US$0.747) the broker forecasts a net profit of $12 million in fiscal 2018.

As a means of comparison, Hartley’s projections are based on an Australian dollar zinc price of $1.56 per pound as opposed to the current spot price of $1.66.

However, it should be noted that It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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