White Rock leads juniors looking to capitalise on zinc price
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White Rock is at the forefront of ASX juniors looking to capitalise on the best zinc prices in 10 years, writes Barry FitzGerald in his weekly Garimpeiro column.
It’s a decent trip for White Rock Minerals (ASX:WRM) boss Matt Gill from the company’s Ballarat head office in country Victoria to WRM’s Mt Carrington gold-silver project near Drake in northern NSW.
But it is an even longer haul to WRM’s new pride and joy, the recently acquired Red Mountain zinc project, 100 km south of Fairbanks in mining friendly Alaska.
Not that Gill – one of the best known faces in the Australian resources sector after co-ordinating, as mine manager, the rescue of trapped underground miners Todd Russell and Brant Webb two weeks after the 2006 Anzac Day rock fall at the Beaconsfield goldmine in Tasmania – is complaining about the long haul.
The Red Mountain acquisition has placed WRM at the forefront of the band of ASX juniors looking to capitalise on the best zinc prices in 10 years, a response to the closure of some big name producers of the galvanising metal and China’s environmental crackdown on its domestic producers.
WRM picked up Red Mountain from private interests last year for the knockdown price of $1 million in scrip and options.
Discovered in the 1990s, the project has pretty much been in a deep freeze ever since.
But previous drilling at property was of sufficient quantity and quality to allow a maiden resource estimate to be made by an independent expert in April this year.
It was a game changer for WRM, coming in as it did across the two deposits that make up Red Mountain at 16.7m tonnes (inferred) grading 8.9 per cent zinc equivalent for 1.5mt of contained zinc equivalent (it gives lead, silver, copper and gold present a zinc value).
Within the inferred estimate, a high-grade resource of 9.1mt grading 12.9 per cent zinc equivalent for 1.2mt of contained zinc was estimated.
It would be worth $4.5 billion if it was sitting in a warehouse after having been mined, processed and shipped. But there is a long way to go before WRM gets to mine Red Mountain.
That is reflected in WRM’s current $13 million market cap (1.5c a share).
Still, the resource is bigger than that held in Australia by some of the more fancied ASX-listed zinc juniors with much bigger market capitalisations, and it has a better grade as well.
It is a point picked up on by broker DJ Carmichael in a research note on WRM dated August 30.
The broker valued Red Mountain at 6c a share or four times WRM’s current share price, without putting any value on the project’s exploration upside.
As it is, remote sensing work by WRM has identified another 30 ‘lookalike’ targets in the area around the two known deposits.
And as indicated, the Carmichael valuation of 6c a share valuation did not include any value for the Mt Carrington which comes with an indicated and inferred resource of 338,000 oz of gold and 23.4m oz of silver.
Mt Carrington is a near-term development opportunity once planning and environmental approvals are secured.
It benefits from the orebody having been stripped of its overburden by previous owners, and the presence of bits and pieces of infrastructure which would cost $20 million to replace today.
The project has the potential to generate lots of cash for WRM over its initial seven-year mine life and unusually, it is effectively already financed for development under a conditional $US19m gold stream financing deal with US group and WRM’s second biggest shareholder, Cartesian Royalty Holdings.
Another unusual WRM attribute is the depth and experience of its board, led by chairman Brian Phillips who is also chairman of ASX-listed nickel stock Panoramic (PAN).
Also on the board is Peter Lester, the chairman of lithium stock Kidman (KDR), and Ian Smith, the former CEO of Australia’s biggest gold producer Newcrest (NCM).
They are all mining engineers with 40 years-plus experience.