Shutdown at NQ mine

THE operator of a base metals mine near Charters Towers, employing 130 people, has been placed in administration amid ongoing production difficulties caused by a collapse in the mine.

Michael Ryan, David McGrath and Kathryn Warwick of FTI Consulting were appointed to Cromarty Resources Pty Ltd, owner and operator of the Thalanga zinc, copper and lead mine 200km southwest of Townsville, on October 28.

The trading of shares in its parent company, Asx-listed Red River Resources, was suspended this week although the appointment of administrators is only to Cromarty, not Red River and does not extend to another of its entities Hillgrove Mines Pty Ltd in NSW.

In its September quarter report released on Monday, Red River Executive Director Patrick O’connor said the company faced “very real challenges” at the Thalanga operation during the quarter.

“The placing of Cromarty Resources Pty Ltd into voluntary administration is tremendously disappointing for all stakeholders but is in the best interests of the company’s shareholders as it takes steps to preserve shareholder value,” Mr O’connor said.

He said they were in discussions with “various” stakeholders regarding options to preserve shareholder value and would provide further updates in due course.

Red River reported on August 4 that a “fall of ground” event had occurred at Thalanga’s Far West mine and that an operator had received a precautionary medical examination but subsequently had been discharged with no serious injuries.

Underground mining operations were suspended for about two weeks.

According to Red River, the appointment of administrators followed operational issues at the mine and concerns that ongoing reduced production and increasing costs meant Cromarty may become insolvent.

Red River says the administrators determined to place Thalanga on care and maintenance. While Red River suspended underground operations at Thalanga from August 2 until August 19 August, progressive re-establishment of mining areas had occurred using revised ground support and updated geotechnical procedures for stoping.

The company says the additional ground support and technical work significantly impacted the forecast mining schedule for 2022-23, reducing ore availability and decreasing the mining rate.

Mill production for the September quarter was down 54 per cent.

Red River says it is the largest secured creditor of Cromarty Resources and has

provided a guarantee to commodity trader Trafigura Pte Ltd on a working capital

facility agreement between Cromarty and Trafigura.

Red River reported an unaudited consolidated loss for the quarter of $9.5m.

Since August the company’s share price has halved to about 7c.

Representatives of the company and administrators could not be contacted for comment.