White Rock Minerals Ltd (WRM)

Red Mountain Zinc Project - Valuation

The Red Mountain Polymetallic Project is located 100km south of the city of Fairbanks in Alaska, United States. RPM Global Holdings Limited (“RPM”, formerly Runge Pincock Minarco Limited) derived a maiden JORC 2012 resource estimate of 16.7Mt at a zinc equivalent grade of 8.9%. This immediately places Red Mountain as an important VMS asset within a global context and one that stands as a peer to the more well-known deposits such as Heron’s Woodlawn deposit and Red River Resource’s Thalanga project. We derive a valuation for the Red Mountain Project, using transactional-based and peer analysis-based methodologies of A$52.9m, but note the significant potential to increase the resource base from numerous, untested, high priority exploration targets.

Key Points

  • A significant resource generated from historical data: RPM produced a maiden Inferred JORC 2012 resource estimate for the Red Mountain polymetallic project in April 2017, compiled from three zones in two deposits. The resultant global resource of 16.7Mt at 8.9% zinc equivalent presents WRM with a number of options with respect to further development.
  • High grade component: Within the existing global resource is a high-grade resource of 9.1Mt at 12.9% Zn equivalent (using a 3% Zn cut-off grade). This places Red Mountain as one of the highest grade and more significant deposits of any zinc company listed on the ASX.
  • Direct zinc deposit peers are going into production: The closest direct peer to Red Mountain’s global resource is Heron’s (ASX:HRR) Woodlawn deposit, which is just started earthworks in preparation for imminent construction. The high grade resource’s closest peer is the Thalanga Project, owned and operated by Red River Resources (ASX;RVR), also just about to start production.
  • Combination of valuation methodologies: We undertook an analysis of recently completed transactions involving VMS deposits and analysed WRM’s peer group on the ASX to derive a market-based valuation using enterprise value per tonne of Zn equivalent metal. We did not assume any value for exploration upside, or any value for WRM’s gold and silver Mt Carrington project in NSW. We then cross-checked against a 1% of in-situ metal value, as a “rule-ofthumb” valuation methodology.
  • Plenty of upside: WRM hold 143km2 of highly prospective ground that has remained in private hands for over a decade, has had no modern exploration and has 30, individual, undrilled VMS targets. There is good potential for additional discoveries to add to the resource base.
  • Average valuation: We averaged the results of the different valuation methodologies to derive an average of A$52.9m, equivalent to $0.06 per share.
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Overview of WRM

  • White Rock Minerals Limited (WRM) is a mineral explorer and developer with two major, 100% owned, projects. The advanced, epithermal Mt Carrington gold-silver project in northern NSW, Australia and the recently acquired Red Mountain polymetallic project in Alaska, USA.
  • Mt Carrington has already been the subject of a Pre-Feasibility Study, which is currently being upgraded and optimised whilst the project undergoes a number of approval and permitting processes. Mt Carrington has significant existing infrastructure having been mined historically and WRM has already obtained a funding proposal with NY-based Cartesian Royalty Holdings for US$19m, subject to a positive definitive feasibility study (DFS), all permits and approvals being in place and final negotiation of terms.
  • The Red Mountain Polymetallic Project in Alaska, which is the subject of this note, was acquired in April 2016. The project is an advanced, zinc-dominated VMS (volcanogenic massive sulphide) exploration project located within 100km of Alaska’s second largest city, Fairbanks (pop. 32,000).
  • A recently conducted sizable maiden JORC 2012 resource estimate presents a number of strategic opportunities to WRM, from establishing a small starter operation to continued exploration on numerous existing and prioritised targets in order to grow the size and value of the project.

Disclosure & Disclaimer


This Research report, accurately expresses the personal view of the Author.

DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. DJ Carmichael Pty Limited and or its employees hold an immaterial holding in White Rock Resources Limited. The author of this report does not own shares in White Rock Resources Limited. DJ Carmichael Pty Ltd acts as Corporate Advisor to White Rock Minerals Limited and is paid a fee for that service.

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Recommendation Definitions

SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
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Paul Adams

Head of Research

Paul joined DJ Carmichael in 2006 as a Resource Analyst. Paul has an honours degree in Geology, is a member of the Australian Institute of Mining and Metallurgy and has 16 years experience in the mining industry in exploration, open pit, underground and operational roles, both in Australia and overseas. Before joining the company, he was Chief Geologist and Evaluations Manager at Placer Dome's Granny Smith mine. Paul has a Graduate Diploma in Applied Finance and Investment, fromthe Financial Services Institute of Australasia.