Red River Resources : Quarterly Activities and Cashflow Report - December 2016

ASX Announcement ASX Code: RVR 31 January 2017 Quarterly Activities and Cash Flow Report for the period ending 31 December 2016

Australian zinc developer Red River Resources Limited (ASX: RVR) ("Red River" or "the Company") is pleased

to report its activities and corporate developments for the December 2016 Quarter.

Highlights

During the quarter, RVR successfully undertook a two tranche $30 million placement, with the second tranche (approximately $16 million) settled subsequent to the end of the quarter. This placement, combined with RVR's existing cash balances has fully funded the Thalanga Zinc Project restart, and allowed Red River to commence the restart of the Thalanga Zinc Project, with commercial concentrate production scheduled to commence in 2H CY2017.

Red River is now positioned as the sole ASX listed zinc company scheduled to commence production in CY2017, and when production starts, Red River will be the sole ASX listed pure play zinc producer.

Thalanga Zinc Project Restart & Development Activities

• Project on track to restart production in 2H 2017

• Refurbishment work continued to optimise plant for restart of production

  • Concentrate thickener rakes refurbished, currently installing and commissioning all three thickener drives

  • Structural work completed around Mills 1 & 2 - main beam and others replaced

  • Refurbishment of concentrate storage bunds underneath filter press, old steelwork has been stripped out.

  • Conveyor audit completed

  • Feed chute of CV05 removed, being refurbished

  • Started refurbishment work on powerlines

    Thalanga Zinc Project Exploration Activities

• 17 drill holes were completed during the quarter (for a total of 5,778m drilled) at the Far West, Liontown East and Thalanga Mining Lease targets.

• Two drill holes (one at Far West and one at Liontown East) were abandoned due to excessive deviation.

  Table 1 Thalanga Zinc Project Drilling Summary

  Project	Holes Completed	Total Metres Drilled
  Far West	15	4,670
  Liontown East	1	693
  Thalanga Mining Lease Exploration	1	414

  Address: Level 6, 350 Collins Street, Melbourne, VIC, 3000

  T: [phone] F: [phone] E: [e-mail]

  www.redriverresources.com.au

  Corporate

• An oversubscribed $30 million placement was completed to fully fund the restart of Thalanga Zinc Project. The placement was conducted in two tranches, and the second tranche was settled subsequent to the end of the quarter.

• A deferred cash payment of $1.5 million was made to Kagara Ltd (in liquidation) as final consideration

  for Red River's acquisition of 100% of the Thalanga Zinc Project.

• Red River welcomed Ausbil Investment Management Limited as a substantial shareholder during the quarter (initial holding of 22.5m RVR shares) and was pleased to note the continuing support from an existing substantial shareholder, Contango Funds Management Limited, who increased their holding in RVR during the quarter (from 15.5m to 26.0m RVR shares).

• 2.328m options were exercised during the period.

• Cash balance of $20.9m at 31 December 2016.

  Plans for March Quarter CY2017

  The planned activity levels on site will materially increase, with an increase in staff (Red River and contract) and the commencement of mining activities at West 45 (subject to engagement of a mining contractor).

  Thalanga Zinc Project Restart & Development Activities

• Finalise engagement of mining contractor and restart mining activities at West 45;

• Continue restart & refurbishment activities at the Thalanga Plant;

• Complete hiring of senior management personnel; and

• Conclude concentrate offtake agreement negotiations.

  Thalanga Zinc Project Exploration Activities

• Continue resource definition and extension drilling at Far West;

• Continue drilling at the exciting Liontown East target;

• Complete the ongoing IP target generation survey; and

• Commence extension drilling at West 45.

• Safety & Environmental Performance

  A total of 13,315 man hours were worked for the period 1 October 2016 to 31 December 2016, with no injuries recorded during this period. No environmental incidents were reported during this period.

  Dewatering of the Vomacka pit has continued throughout the quarter and water levels have dropped significantly. A hazardous dam audit as well as the third party audit of the Environmental Authority was completed and submitted, with no major issues were raised.

  The water level in the West 45 underground development is being kept at a minimum, with occasional pumping throughout the quarter. Maintenance activities around buildings and equipment continued, with corroded structures being replaced and painted. Structures around the grinding circuit have been repaired and damaged beams replaced. Works around the fine ore bin were completed to ensure effective drainage in that area, conveyor structures were cleaned and inspected. Man hours increased with an increase in exploration activities with all three drill rigs operating at full capacity and also associated manpower with increased site activity during the refurbishment process.

• Thalanga Zinc Project Restart & Development Activities

  The Thalanga Zinc Project is located 60km SW of Charters Towers in Central Queensland (Figure 1) and consists of the following key assets:

• 650ktpa capacity polymetallic processing facility capable of producing separate copper, lead and zinc concentrates;

• Tailings storage facility; and

• Site offices, workshops and change facilities.

Site access is by sealed road, and historically, the Thalanga Zinc Project was run as a residential operation, with the workforce predominately living in Charters Towers. The site has been kept on active care & maintenance since it was last operated in early 2012.

Subsequent to the end of the quarter, Red River completed a $30 million placement which has fully funded the restart of the Thalanga Zinc Project. The full restart of the Thalanga Zinc Project commenced on completion of the placement, with commercial production scheduled to commence in 2H CY2017.

Figure 1 Thalanga Zinc Project Location

1. Concentrate Offtake

Red River has shortlisted a number of parties as potential offtake partners for the Thalanga copper, lead and zinc concentrates. Discussions will continue with these parties, with the objective of finalising an offtake agreement early in CY2017.