Redcorp inks Tulsequah offtake and credit MOU

Vancouver – Aspiring base metals producer Redcorp Ventures (RDV-T, RDFVF-O) has lined up Swiss-firm MRI Trading to purchase zinc, copper and lead concentrates from its planned Tulsequah Chief mine in northwestern British Columbia.

The memorandum of understanding (MOU) also has the metals trading firm providing a contingent credit facility of $25 million for mine construction and working capital secured by Redcorp assets.

The proposed finance facility gives the company some breathing room as it still has funds tied up in short-term notes that have not been repaid due to the non-bank asset-backed commercial paper (ABCP) liquidity crisis of mid-2007.

After closing a $252-million financing last July it sunk about $102.2 million into notes secured in trusts managed by Coventree. Redcorp reports about $91.4 million of the notes remain outstanding.

MRI Trading is agreeable to assisting Redcorp in seeking out alternative financing options to replace any shortfall resulting from incomplete recovery of its ABCP investments.

Redcorp also reports it has been in preliminary negotiations relating to the sale of a portion of its planned silver output.

Construction and development work at Tulsequah Chief has continued through the winter with work progressing on infrastructure including a new airstrip and road networks. The project has experienced some delays on permitting and construction items that will likely push back its slated production start of late-2008.

An early-2007 feasibility study for Tulsequah tabled a base case mining scenario of a 2,000-tonnes-per-day underground operation over an 8-year mine-life. The study uses a probable reserve of 5.4 million tonnes grading 1.4% copper, 1.2% lead, 6.3% zinc, 2.6 grams gold per tonne and 93.7 grams silver per tonne.

Average annual metal output is forecast at 88.6 million lbs. (40,200 tonnes) zinc, 19.8 million lbs. (9,000 tonnes) copper, 8.6 million lbs. (3,900 tonnes) lead, 1.7 million oz. silver and 50,000 oz. gold.

Redcorp’s operating plans calls for supplies and concentrate transport by tug-towed barges operating year-round on the Taku River to Juneau, Alaska — eliminating the need for an access road into the project that could have cost roughly $50 million.

Shares of Redcorp perked up modestly on news of the MOU, gaining 1.5 to close at 28.5 apiece in February 4th trading — giving the company a $113-million market capitalization based on its 398-million shares outstanding. The stock has a 52-week trading range of 13.5-to-72.