Base metals: White Rock woos Sandfire for its extremely high-grade Alaskan zinc project
It’s not often you get a big, largely Australia-focused copper producer to agree to spend millions on a zinc project in Alaska — but that’s just what White Rock Minerals (ASX:WRM) has done.
The $1.1 billion Sandfire Resources (ASX:SFR) has inked a deal that will see it sink potentially as much as $30m into White Rock’s Red Mountain project in exchange for up to a 70 per cent stake.
The news sent shares up 20 per cent to 0.6c on high volume trade straight after market open on Monday.
Sandfire can earn an initial 51 per cent stake by spending $20m on exploration over four years, with at least $6m of that to be spent this year.
The heavyweight can increase its interest to 70 per cent by spending another $10m and delivering a pre-feasibility study, including a reserve, within another two years.
Mineral reserves are resources known to be economically feasible for extraction.
Managing director Matt Gill said the deal will fund the Red Mountain project right through to advanced development studies and allow White Rock to retain a 30 per cent stake.
“Our small market cap and the size of their JV investment are testament to the value that can be added here,” Mr Gill told Stockhead.
“Their balance sheet dollars applied to our project is a great non-dilutive funding outcome for WRM shareholders.”
Sandfire’s interest in the 475-sq-km Red Mountain project may have something to do with the extremely high grades and the fact it is also a volcanogenic massive sulphide (VMS) deposit.
VMS deposits are a type of large metal sulphide ore deposit, mainly copper and zinc, that range in size from 4 million to 25 million tonnes.
Mr Gill said that besides being a copper producer, Sandfire is also predominately a very successful VMS explorer, developer and miner.
Sandfire’s DeGrussa and Monty mines are VMS deposits.
“They also seek district scale opportunities — our high-grade zinc and precious metals VMS project meets this criteria,” Mr Gill said.
On top of that, Alaska was ranked number five in the world for mining investment in the Fraser Institute’s most recent survey.
Red Mountain currently hosts two high-grade deposits with an inferred resource of 9.1 million tonnes at 12.9 per cent zinc equivalent for 1.1 million tonnes of contained zinc equivalent.
Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.
Mid-last year, Red Mountain yielded extremely high grades of 19.5 per cent zinc and 1435 grams per tonne (g/t) of silver during initial drilling.
Anything over 10 per cent zinc and 50g/t silver is considered high-grade.