Red River Resources Limited (ASX:RVR) Quarterly Report April-June 2010
Activities carried out during the quarter were as follows:
MIAREE GOLD PROSPECTS, KARRATHA AREA, PILBARA REGION, WESTERN AUSTRALIA
In conjunction with Iron Mountain Mining Limited (ASX:IRM) ("Iron Mountain"), Red River Resources completed a program of stream sediment and soil geochemistry in the Miaree project area southwest of Karratha in the Pilbara region of Western Australia during September to December 2009. The location of the project area is shown in and the geochemical sampling resulted in the delineation of numerous spotty gold anomalies with individual sample values ranging up to 0.6 g/t. The sampling was undertaken subsequent to a metal detector gold rush which occurred further to the east in late 2008/early 2009 and which is reputed to have resulted in the discovery of over 1,000 ounces of gold. The area encompassing these recent discoveries occurs in a favourable geological setting at the western end of the Karratha Granodiorite: it contains numerous faults which are likely to have acted as strong fluid migrating pathways, and it also contains a number of associated electromagnetic (EM) anomalies detected by an airborne survey flown for Dragon Mining in 1994. Similar EM anomalies extend westwards into E47/1309 lying within the Miaree project area.
During the June quater of 2010 focus of exploration moved to the northeastern corner of E47/1309 where there is an abundance of vein quartz float as well as gossanous pisolite and where prospector activity has located fresh occurrence of gold nuggets. As this location lies within the Sholl Shear Zone, a major transpressional geological structure, the outcropping field signs may be indicative of a significant mineralised system. A recent round of pisolitic soil sampling has been carried out over the Napier Prospect and analytical results are expected to be received during the September 2010 quarter.
HOOLEY WELL PROSPECT, MID WEST REGION, WESTERN AUSTRALIA
The Hooley Well nickel prospect contains a large IP chargeability anomaly, 3 km long, delineated during mid 2009. An Aboriginal Heritage Survey was carried out over proposed drilling sites and there are no significant sites there.
TAABINGA UNDERGROUND COAL GASIFICATION PROJECT, QUEENSLAND: EPC 1181 and EPC 1921
On 17th May 2010 Red River announced that it had entered into a Heads of Agreement (HOA) with Black Gold Resources Limited ("Black Gold"), an unlisted company, whereby it can earn a 50% interest in EPC 1181 and EPC 1921 (the Taabinga Project) for the expenditure of A$2 million.The tenements are situated at Kingaroy, 150 km northwest of Brisbane, Queensland. Independent consultants have calculated that EPC 1181 contains JORC-compliant indicated and inferred resources of 82.1 million tonnes of coal and there is further exploration potential in EPC 1181 lying to the north.
The coal deposits in EPC 1181 lie between 3-9 km northwest of the Cougar Energy Limited (ASX:CXY) Kingaroy Underground Coal Gasification (UCG) project which initiated firing of a coal seam and successfully started producing syngas during March 2010. The current JORC resource in ground held by Cougar is 73 million tonnes and this resource is estimated to sustain a UCG project life of 30 years. The coal in the Cougar Energy project area is contained within three seams: the Kunioon, Swain and Googer seams and these three seams extend northwestwards into EPC 1181. Figure 3 shows the locations of coal drillholes in EPC 1181 and Figures 4 and 5 are cross-sections showing the distribution of these coal seams within the permit.(see link at the bottom)
UCG is at the forefront of the trend for alternative energy and it contains significant environmental and economic advantages over coal seam methane and natural gas. The Kingaroy area contains the Tarong Power Station which is powered by coal from the Meandu open cut mine and new sources of energy around Kingaroy are optimally placed to provide power to the Queensland electricity grid.
Currently three companies are trialling UCG in Queensland where the government has placed a moratorium on further UCG evaluation programs until about 2011/12 when a report will be presented to cabinet with its findings on UCG technology. UCG potentially poses conflicting use of coal resources (in the case of underground coal mining) or of the methane contained within the coal seams (in the case of coal seam gas). However the coal seams within EPC 1181 are thermally immature for methane generation so they are not prospective for coal seam gas. Additionally, they have high ash content and they are deep, so not really prospective for underground coal mining. However, the seams within EPC 1181 appear to be eminently suitable for UCG in that they occur between 100-500 metres below surface and have thicknesses ranging up to 15 metres in places. The coal deposits around Kingaroy are suitable fot the application of this alternative technology and are unlikely to be declared off-limits to UCG exploitation beyond 2012/13.
TERMS OF THE HOA
The agreement is subject to shareholder approval by both companies. (Mr David Zohar is a director and major shareholder of both Red River and Black Gold. Therefore the proposed JV between the two companies is a "Related Party Transaction". The companies are required to have prepared reports by independent experts stating that the Proposed JV is "fair and reasonable" and then distributed to shareholders prior to voting).
Red River is to be the manager of the JV and is to earn a maximum of 50% by spending A$2 million on exploration/development on the exploration licences EPC 1181 and EPC 1921 to earn 50%. The earn-in will be staged with the first tranche of 12.5% earned by expending A$500,000 then a further 37.5% earned by spending A$1.5 million.
Red River must spend a minimum of A$200,000 before any withdrawal. Until any withdrawal Red River is required to keep the tenement in good standing including all legal, government and exploration obligations.
Upon shareholder approval, a full JV agreement will be finalised.
FINANCIALS - APPENDIX 5B (see link at the bottom)
At 30th June 2010, the company had available funds of approximately A$1.7 million. The company's 5B highlights the quarter's cash activities and other relevant financial information.
For the complete Red River Resources announcement including figures and tables, please view the following link:
About Red River Resources Limited
Red River Resources (ASX:RVR) is a diversified mineral explorer currently (late 2009) focusing on gold and also exploring for copper, nickel, tin, magnetite iron ore, tantalum and lithium.
Red River's current projects include; Miaree, Karratha area, Western Australia (Iron Mountain Mining JV): gold. Wongan Hills, Mid West Region, Western Australia (Operator Dominion Mining, Iron Mountain Mining JV partner): gold, copper. Blythe, Burnie area, Tasmania (Iron Mountain Mining JV): magnetite iron ore, tin, tungsten. Hooley Well/Imagi Well, Mid West region, Western Australia (Eagle Nickel JV): nickel. East Kirup, southwest Western Australia (Operator Dunvegan Resources): lithium, tantalite, tin.
Red River Resources Limited
Cougar Energy Limited