Administrators brought in over Thalanga woes

Troubles at the Thalanga base metals operation in North Queensland have seen Red River Resources call in the administrators for subsidiary Cromarty Resources. A hampered mining rate has strangled the operation's cash flow since a fall of ground in the Far West mine in August. The FTI Consulting administrators appointed will immediately review the viability of operations continuing. In its announcement to the ASX, Red River stated; "The appointment (of administrators) follows the recent operational issues at the Thalanga site, as has been recently disclosed to the market, and concerns that ongoing reduced production levels and increasing costs mean Cromarty may become insolvent." Red River was forced to halt underground mining at Thalanga for more than a fortnight in August due to a fall of ground in a stoping area. The additional ground support and technical work required to continue mining has significantly impacted the forecast mining schedule for this financial year. The problems saw mill throughput reduced to 41,000 tonnes last quarter - down 54 per cent on the previous three-month period. Production of zinc concentrate, copper concentrate, and lead concentrate all dropped significantly due to lower grade and tonnes milled. Red River said it had already taken measures including changing staffing levels and roster to control costs and match processing capacity to the reduced mining rate. It has been working with onsite mining contractor Pybar to manage multiple variations, claims and their proposed renegotiation of the contract rates. The company said it was also managing water compliance issues at Thalanga and preparing for the wet season including interacting with consultants and the regulator. "It has become apparent the revised forecast mining rate will be about 20-22kt per month for the remainder of the FY2023 period, and the mining rate is unlikely to return to the historical forecasted FY2023 Budget mining rate of 30kt per month," it stated. The appointment of administrators only relates to Cromarty and does not extend to Red River's New South Wales business under Hillgrove Mines. Red River Resources said the company was in discussions with various stakeholders regarding options to preserveshareholder value and expected to remain in a trading halt pending an update on the outcome of those talks. The largest secured creditors of Cromarty Resources are Red River Resources and Trafigura. Red River has provided a guarantee to Trafigura in relation to the working capital facility agreement between Cromarty and Trafigura. A creditors' meeting is expected within the next fortnight.

Administrators brought in over Thalanga woes

Industry Queensland

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