Red River Resources Share Price up as Production Nears (ASX:RVR)
The share price of diversified metals producer Red River Resources Ltd [ASX:RVR] is slightly higher today, with the company announcing production is set to begin at the Hillgrove Gold Project.
The RVR share price has hit a higher gear recently as gold production at Hillgrove draws nearer.
Though this hasn’t taken the miners attention away from its other assets, breaking record copper production at it Thalanga Mine earlier this month.
At time of writing the RVR share price is up 5% to trade at 21 cents per share.
Let’s have a look at what Red River has going on
Today, RVR gave us an update at what the economics at Hillgrove are expected to look like.
With production at the mine expected to begin before the end of the year, now is a good time to cast our eyes ahead to see what the share might look like.
According to RVR, Hillgrove will have low operating risk and minimal capital cost using thanks to their staged restart approach.
Stage 1 will begin gold production by reprocessing the 225kt at 2.5 grams of gold per tonne (g/t) stockpile already present on site.
Which is projected to have a capital cost of just $5 million.
RVR say this should kick off in December.
Stage 2, which will be the bulk of the operation, won’t begin until late next year.
This consists of a full restart of underground mining operations.
The underground component of the mine has a JORC mineral resource of 3Mt at 4.5 g/t and 1.4% antimony, which combined is equivalent to 6.5 g/t of gold.
Meaning, this mine has a contained 426koz gold and 41kt antimony.
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As it stands, RVR is aiming for Stage 2 operational life of five-plus years, producing 30,000–50,000oz gold equivalent per annum.
What does this mean for the future sRVR hare price?
If you think that sounds like a short operational life, that’s because it is.
Though RVR say there is substantial upside to extend the mine life and/or increased production rate.
If so, RVR estimates this would bring them to a total of 692koz gold and 75kt antimony.
Decent, but not huge.
The thing you need to remember about a project like this is that they are opportunistic.
By that I mean they are not going to be a tier 1 mine.
Hillgrove is more likely to be a tier 3 deposit because of their smaller size, and is only profitable during the top of the business cycle or they already have existing mining infrastructure.
In my opinion, we aren’t at the top of the business cycle yet and we could have a fair way to go before we get there. Which could be good news for stocks like RVR. That’s because Australia is gearing up to surpass China as the undisputed global leader in gold exploration, mining and production. In her latest report, gold expert Shae Russell breaks down what Australia becoming the new gold ‘epicentre’ means for gold and your Aussie gold stocks. Click here to download the free report.
For The Daily Reckoning Australia