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WHITE ROCK MINERALS LIMITED

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Zinc-Silver-Gold Drill Intersections Extend Mineralisation at Red Mountain

ASX Announcement 24 September 2018 

White Rock Minerals Ltd (“White Rock” or the “Company”) is pleased to announce that assay results for a further 6 diamond drill holes have been received. Targets tested by these drill holes included extensions to the Dry Creek Deposit (the Discovery lens and the Fosters Gap targets), as well as a series of newly identified targets away from the known deposits at Dry Creek West, Ram and Megan’s South. Results for a further 7 diamond drill holes remain outstanding and are expected within the next month2 .

MD & CEO Matt Gill said “This drilling represents a significant extension to the Dry Creek deposit and notably down dip at both the Fosters and Discovery lenses. The recent results also include the testing of more distant targets identified from our work based on the earlier data and supported by our recent on-ground reconnaissance work, followed by the application of the CSAMT geophysics tool. The results do point to broad VMS mineralisation zones, containing zinc, lead, silver, gold and copper, that warrant follow-up in 2019. The discovery of mineralisation some distance from the known deposits supports our expectation that continuing exploration of The Red Mountain area will confirm a significant VMS camp.”

Highlights from the current assay results include: 

  • 4.2m @ 5.9% zinc, 2.5% lead, 96g/t silver, 0.9g/t gold and 0.1% copper for 11.4% ZnEq1 (DC18-82) from the Discovery lens, Dry Creek deposit. 
  • 5.2m @ 2.5% zinc, 0.9% lead, 12g/t silver, 0.1g/t gold and 0.1% copper for 3.7% ZnEq1 (DC18-84) from the Foster lens, Dry Creek deposit. 
  • 5.2m @ 2.0% zinc, 0.9% lead, 39g/t silver, 0.2g/t gold and 0.1% copper for 3.9% ZnEq1 (DC18-85) from the Foster lens, Dry Creek deposit. 
  • 7.6m @ 1.4 zinc, 0.4% lead, 4g/t silver, 0.1g/t gold and 0.1% copper for 2.1% ZnEq1 (DC18-86) from the Ram prospect.

The diamond drilling results are part of White Rock’s maiden drill campaign at the Red Mountain project, where there are two existing deposits, Dry Creek and West Tundra, which already have a Resource base of 16.7Mt at 8.9% ZnEq1 including a high-grade component of 9.1Mt @ 12.9% ZnEq1 (refer ASX announcement 26 April 2017 regarding the maiden Mineral Resource).

2 The ASX Release dated 20 September incorrectly stated that assays were awaited for 7 drill holes. This should have said 13 drill holes.

Results for DC18-82 to DC18-87 are summarised in Table 1.

Click here to view the full announcement

Red Mountain Zinc-Silver-Gold VMS Project Exploration Update

ASX Announcement 20 September 2018

White Rock Minerals Ltd (“White Rock” or the “Company”) is pleased to provide a summary to date from its inaugural exploration field program at its flagship Red Mountain project. 

Exploration program highlights for 2018 include: 

  • Discovery and successful drill testing of the new Hunter prospect massive sulphide mineralisation with 1.4m @ 17.4% Zn, 3.9% Pb, 90g/t Ag & 1.6% Cu for 25.8% ZnEq1 from 48.2m (HR18-01)2 . 
  • Best drill intersection at West Tundra deposit with 3.5m @ 15.1% Zn, 6.7% Pb, 518g/t Ag, 2.1g/t Au and 0.2% Cu for 35.2% ZnEq1 (WT18-28)3 . 
  • Best drill intersection into the Discovery Lens at the Dry Creek deposit with 4.7m @ 19.5% Zn, 7.8% Pb, 466g/t Ag, 6.9g/t Au and 1.5% Cu for 49.7% ZnEq1 (DC18-79) 4 . 
  • Down dip extension of the Fosters Lens at the Dry Creek deposit with 4.3m @ 4.8% Zn, 2.3% Pb, 1,435g/t Ag, 2.2g/t Au and 0.5% Cu for 43.2% ZnEq1 (DC18-77)4 remaining open down dip. 
  • Completion of a detailed regional stream sediment program across the entire 143km² strategic tenement package to assist in focusing follow-up work for the 2019 field exploration program. 
  • Successful orientation ground geophysics across known mineralisation with CSAMT accurately identifying massive sulphide mineralisation at Dry Creek and West Tundra enabling the technique to be a rapid reconnaissance tool for identifying drill targets within zones of anomalous geochemistry and favourable stratigraphy. 
  • Successful application of portable XRF analysis of soil samples to deliver rapid target generation. 
  • A total of 24 drill holes for 4,111 metres of diamond core drilling have been completed during 2018. Assays are awaited for 7 drill holes. The drill rig has now been demobilised. 
  • The CSAMT crew acquired 40 line km of new data along strike of Dry Creek and West Tundra. 
  • Field crews collected 435 stream samples, 1,835 soil samples and 330 rock chips samples. Stream samples are awaiting assaying. 

MD & CEO Matt Gill said “We are very pleased with the success of our first field season in Alaska at the Red Mountain project. Through an aggressive approach deploying a drill rig early on the tail of geological prospecting, surface sampling and ground geophysics, we have been rewarded with the discovery of massive sulphide mineralisation in outcrop within three months of starting our very first program.

The discovery of a new massive sulphide occurrence at Hunter, open along strike (traced for 500 metres) and down dip, goes a long way to supporting the thesis that the Red Mountain project has the potential to host multiple deposits and expand into a true VMS camp. It is satisfying that the active field season has allowed us to apply a systematic approach to covering the prospective 143km² ground package, which enables us to focus on the most highly prospective areas in 2019 using proven successful techniques including CSAMT ground geophysics and portable XRF geochemical analysis of soils to generate numerous additional VMS prospects for drill testing in 2019”. 

Mr Gill concluded, “We have collected an enormous amount of geological data from our intense on-ground field work, and much of this information is now working its way through the assay laboratories. We will be compiling this information, together with the current and outstanding drill hole results, to assess, report and plan for next year’s value-adding program. Included in this body of work will be an assessment of the existing and new data for a possible JORC Resource Update.” 

The 2018 field season saw continuous use of a diamond drill rig. Drill targets included initial validation drilling of the two known deposits (Dry Creek and West Tundra), extension drilling at Dry Creek, and 9 new targets tested with 13 drill holes including discovery of the Hunter massive sulphide mineralisation 5km west of the Dry Creek deposit. In addition to continuous drilling, the field season also encompassed up to three geological reconnaissance and surface geochemical sampling crews active throughout the field season, and two months of a CSAMT ground geophysics team. The CSAMT survey followed a detailed orientation program of ground geophysics that included moving loop electromagnetics and induced polarisation – resistivity across known mineralisation, and also the use of downhole electromagnetics.

Click here to view the full announcement

White Rock Minerals Limited (WRM) 

Report 6 September 2018 

Brief History

White Rock Minerals (WRM) focus has been on the development of the Mt Carrington goldsilver resource in NSW and more recently the exploration of the high grade Red Mountain zincsilver-lead-gold volcanogenic massive sulphide (VMS) deposits in Alaska. 

  • WRM was listed with the aim of redeveloping the Mt Carrington gold-silver mine in NSW. It has completed a scoping study and a preliminary feasibility study (PFS) which confirmed positive economics. 
  • As a means of progressing Mt Carrington, WRM has a gold pre-paid proposal with Cartesian Royalty Holdings (CRH), an affiliate of the US-based Cartesian Capital Group, announced in 2016, to provide WRM with US$19m (~70% of the capex) for 20% of the gold and silver output from Mt Carrington for the initial 84 months of production and a subsequent 1.75% Net Smelter Return (NSR). 
  • WRM acquired a group of tenements in Alaska in 2016 and subsequently expanded the holding following the delineation of 30 additional targets. 
  • To progress the Alaskan exploration program, WRM entered into an agreement with Sandfire Resources (SFR) which saw SFR become WRM’s largest shareholder and which, subject to SFR exercising the earn-in JV option, will see it fund exploration (a minimum of $20m over 4 years) to acquire up to 51% of the Red Mountain project.

What looks interesting? 

WRM has a group of tenements in Alaska which have zinc-silver resources already defined and are highly prospective for more VMS mineralisation. WRM compares well with two other zinc companies we cover, Red River Resources (RVR) and Heron Resources (HRR), on market cap per tonne of zinc equivalent resource even when we consider that RVR and HRR are either in production or nearing the end of the development phase.

WRM has Sandfire Resources (SFR) as a cornerstone investor with an option to form a joint venture. SFR has provided cash to extend this year’s exploration program in Alaska, plus a further four years subject to SFR exercising the JV option prior to the end of December 2018. SFR is also happy to offer technical assistance when needed. WRM is hunting in elephant country.

WRM has one main asset in Australia, Mt Carrington (gold-silver) which was the subject of a prefeasibility study completed in December 2017, indicated that its development could generate $36.7m in free cash flow and deliver an internal rate of return (IRR) of 34% from processing the gold rich zone only. This would then be followed by the mining of the silver rich deposits further extending the mine life and potentially improving the project’s financial metrics.

We have generated a post-tax valuation of the gold stage for Mt Carrington of $22.8m. This analysis does not include the potential upside from the silver rich zones. WRM’s lack of debt and market capitalisation of $15m, implies that the equity market is placing no value on the Alaskan exploration portfolio. We view the Alaskan tenements as highly prospective for base metal (zinc) and gold-silver mineralisation which will benefit from modern exploration techniques and the first lot of drilling in 10-20 years. Our analysis of similar Australian zinc explorers’ EV/t of zinc equivalent resource implies a potential market value of the zinc resources already delineated of between $28m and $117m with the range derived from using either the median at the low end (A$24/t) and the mean at the high end (A$103/t).

WRM is not going to undergo an instant re-rating but now appears positioned to get some traction. A combination of good board leadership, the option value of Mt Carrington and the exploration blue sky in Alaska makes WRM an interesting ASX exploration play and one that may get more attention following Northern Star’s acquisition of the Pogo mine in Alaska.

What are the assets? 

Red Mountain 

  • WRM is exploring for base metals, silver and gold in the Bonnifield mining district of central Alaska. It acquired one group of tenements in February 2016 and then extended the holding to 143 sq.km after doing follow up work reviewing the open file geological and geophysical data. The expanded tenement holding contains 30 coincident geochemical and geophysical anomalies with similar characteristics to those which host the known JORC resources within the tenements. The mineralisation and rock package are like those which host some of the largest lead zinc resources in North America. 
  • The Dry Creek and West Tundra Flats deposits were discovered in the mid-1970’s and were the subject of limited exploration up until 1999. They sit within the Bonnifield mining district which is part of the Tintina Gold Province which is an arc-shaped 2,000-kilometer-long metallogenic province, bounded by the Tintina and Denali faults that extends from northern British Columbia, through Yukon Territory, and across and into south-west Alaska (FIG.1).

  • Some of the world’s largest base metal and gold deposits associated with ancient volcanic activity have been discovered in Alaska and Canada. These volcanogenic deposits are classified into several types: sedimentary exhalative (SEDEX) style like the giant 140+Mt Red Dog deposit which contained 4% of the world’s zinc reserves, volcanogenic massive sulphide (VMS) style deposits which can be either copper or lead/zinc dominated and generally less than 30Mt, and Mississippi Valley Type (MVT) deposits. VMS deposits can be further subdivided into Cyprus which tend to be small, medium grade rich in copper and zinc, Kuroko which can be large and high grade and Besshi type which occur in mixed volcanic and sedimentary environments and tend to be thin and copper rich.

Click here to view the full research report

Convertible Loan Agreement

ASX Announcement 22 August 2018 

White Rock Minerals Ltd (ASX:WRM) (White Rock) is pleased to announce that it
has secured an additional $1 million in funding to support its exploration activities
at its globally significant high-grade zinc VMS Red Mountain Project in Alaska (Red
Mountain Project).

White Rock has entered into an unsecured convertible loan agreement
(Convertible Loan) with Sandfire Resources NL (ASX:SFR) (Sandfire) providing for
two loans of $500,000 each. As announced on 10 July 2018, White Rock has formed
a strategic relationship with Sandfire in relation to the Red Mountain Project.

Funds from the Convertible Loan are to be used for the exploration and development of the Red Mountain Project.

MD & CEO Matt Gill said “This funding from Sandfire is further endorsement on the quality and prospectivity of our high-grade zinc and precious metals VMS project in Alaska. With this funding, we have now been able to extend our drilling campaign into September and ramp-up our reconnaissance mapping and geochemical sampling works 3-fold, this work already credited with one massive sulphide discovery - Hunter. This funding will help White Rock continue implementing key exploration and development activities at Red Mountain and sets us up well for next year’s campaign".

Key terms of the Convertible Loan are: 

  • Set-off against joint venture: If Sandfire exercises its option to enter into a joint venture agreement (Project Option) in relation to the Red Mountain Project (refer to White Rock's announcement of 10 July 2018 for further details) by 31 December 2018, then the full amount of the loans will be setoff against Sandfire's expenditure commitments under that joint venture agreement. 
  • Conversion to shares: If Sandfire fails to exercise its Project Option: 
    • Loan A will automatically convert into White Rock ordinary fully paid shares at the conversion price of A$0.012 (1.2 cents) per White Rock share (being approximately 41,666,666 shares); and 
    • subject to White Rock obtaining shareholder approval for Listing Rule 7.1 (and for all other purposes), Loan B will automatically convert into White Rock shares at the lower of A$0.012 (1.2 cents) per White Rock share or the 30-day volume weighted average price of White Rock shares calculated at the relevant time. 
  • Repayment: If Loan B cannot be converted in entirety or otherwise (for example, if White Rock shareholder approval for the conversion was not obtained), then to the extent it cannot be converted the balance of Loan B must be repaid in cash by 30 November 2019.
  • Interest: 
    • Loan A will be interest free. 
    • Loan B will be interest free until 28 February 2019, following which it will accrue interest at a rate of 5% per annum calculated daily. 
  • Events of default: The Convertible Loan contains customary events of default (including change of control and an insolvency event of White Rock) that result in the conversion of the Loans and the issue of the relevant number of ordinary shares to Sandfire at the corresponding issue price and to the extent White Rock cannot issue shares to Sandfire, any remaining amount owing will be immediately repayable in cash.

Click here to view the full announcement


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