In the news: White Rock Minerals
WHITE ROCK MINERALS***
WRM : AU | A¢1.6 | US$9.3m
Quarterly Report Highlights Updated DFS Parameters
White Rock Minerals has announced its latest Quarterly Activities Report. The focus for the company remains the DFS for the Mount Carrington Gold-Silver Project in Australia, along with exploration at the Red Mountain Zinc-Silver-Lead-Gold Project in Alaska.
Preparations for the DFS at Mount Carrington are underway and the study is fully-funded, with cash at the end of the period standing at A$3.8m. In the quarterly, management highlighted updated parameters whereby it is targeting plant throughput of 0.8-1.2Mtpa; this up to 50% above what was in the updated scoping study of March 2016. Management expects that, when compared with the scoping study, the DFS could incorporate a 20% increase in in-pit mineral resource tonnes and a 20-40% increase in AuEq production over a similar mine life.
COMMENT: Having completed a positive updated scoping study, assembled a team and raised A$4.9m (before costs), White Rock is now focused on completing the DFS for Mount Carrington, which management currently expects could result in higher throughput and improved economics compared with the scoping study.
Mount Carrington Project background — The company completed an updated scoping study on its 100%-owned Mount Carrington Gold-Silver Project in March 2016. This is a relatively small, but high-return, project comprising two gold-rich open pits and three silver-rich pits together with a flotation/CIL processing route. Estimated capex was low at A$24m, with a capital payback of <1 year. Total resources contained 659,000oz of AuEq, from which 111,000oz of gold and 6.7Moz of silver (203,000oz AuEq) were planned to be produced over a mine life of seven years. Project C1 cash costs were estimated to be A$754/oz AuEq (~US$550/oz). At a gold price of A$1,600/oz and a silver price of A$22/oz, the project had a pre-tax NPV10 of A$61m and an IRR of 103%. The company plans to complete the DFS and the EIS by late 2017. Allowing 12 months for construction suggests that the project could potentially be in production by the beginning of 2019.
Streaming finance from Cartesian Royalty Holdings to fund Mount Carrington’s development — In late July 2016 the company entered a binding, conditional Term Sheet under which Cartesian Royalty Holdings was to provide A$1.0m under a two-tranche placement and a gold and silver streaming-based financing to provide A$19m for the development of the project, in return for 20% of gold equivalent production over a seven-year period subject to a 40,000oz AuEq minimum. The company has stated that, subject to the successful delivery of the DFS, the funding will directly provide for construction and commissioning through to commercial production.
Red Mountain Project polymetallic exploration project has historical resources of 5.7Mt at 5% Zn, 2% Pb and 120 g/t Ag — White Rock Minerals also owns the Red Mountain zinc-rich, polymetallic VMS advanced exploration project in Alaska. Historical estimates are sourced from prior owner Grayd Resource Corp, based on drilling completed between 1996 and 1998. Drilling highlights to date include grades of 26% Zn and 12% Pb over 5.5m at Dry Creek, and 7% Zn and 4% Pb over 3m at West Tundra Flats. Preliminary metallurgical test-work has indicated recoveries of over 90% Zn, >80% Au and >70% Pb & Ag. The company is undertaking a programme of data compilation, geochemistry and geophysics to establish drill targets.
Cash and cash equivalents increased by A$3.4m in the quarter — Cash spent in the quarter totalled A$1.1m. Payments for exploration, development, PP&E and tenements totalled A$0.5m, while payments for staff and G&A also totalled A$0.5m. Offsetting these expenditures were two share placements during the quarter totalling A$4.4m net of transaction costs. Estimated cash outflows for next quarter total A$0.9m, which would leave the company with A$2.9m.
Current EV of A$12.3m/US$9.3m — The company currently has 770m shares outstanding and 101m options. Cash at the end of the quarter was A$3.8m.