White Rock Minerals Ltd (WRM)

Two for the price of One

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 VMS project in Alaska, USA. The Mt Carrington Project is currently subject to an optimisation study / PFS. The Red Mountain resource estimate is already one of global significance and on par in terms of size to the Thalanga and Woodlawn deposits that are currently being put into production by Red River Resources and Heron Resources respectively. We believe the current market value of the company is only reflecting the Mt Carrington Project and that Red Mountain represents a free option into what could be a sizable VMS camp.

Key Points

  • Mt Carrington in PFS: WRM is now optimising the current Scoping Study to derive a PFS to determine the overall scale of a development at Mt Carrington. The PFS contemplates this gold and silver commodity mix, mine extraction sequencing and processing route options. The financial metrics of the project are likely to change once the optimised mill throughput, mine schedule and production rates are established.
  • Existing infrastructure lowers capex: Mt Carrington has had previous mining (in the 1990s) and the current mine plan takes advantage of this – the first two gold deposits are already pre-stripped with the orebodies exposed, and with significant existing infrastructure already in place. WRM has also obtained a conditional funding proposal with NY-based Cartesian Royalty Holdings for US$19m to build and commission the mine.
  • Red Mountain Polymetallic Project: WRM undertook a maiden JORC 2012 resource estimate using a reputable independent consultant. The resulting estimate of 16.7Mt at 8.9% zinc equivalent, containing a high-grade resource of 9.1Mt at 12.9% zinc equivalent, immediately placed the Red Mountain Project in the top quartile of VMS projects globally and one the highest-grade projects of any company on the ASX.
  • Could Red Mountain be a new VMS camp in Alaska? WRM holds 143km2 of highly prospective ground that 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. If successful, the Red Mountain Project could represent a new VMS camp in Alaska, just 100km from Fairbanks and comparatively close to road and rail infrastructure.
  • Significant value in Red Mountain not being realised: We averaged the results of the three different valuation methodologies to derive an average of A$52.9m, equivalent to $0.06 per share for the Red Mountain Project. Our valuation for Mt Carrington, using two methodologies, is $17.3m, or 1.9 cps. The market capitalisation of WRM largely reflects the value in Mt Carrington.
  • Recommendation: We place a Speculative Buy recommendation on WRM and a valuation of $0.08 per share, believing that the market is yet to ascribe any value to the Red Mountain Project. Our 12-month price target of $0.04 assumes some recognition of value at Red Mountain in the short to medium term.

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 zinc and silver project in Alaska, USA.
  • Mt Carrington has already been the subject of numerous scoping studies and is currently being upgraded and optimised whilst the project undergoes a number of approval and permitting processes. Previous Scoping Studies have focused on just mining the gold deposits (2014), and also a second stage where the silver deposits are then mined (2012 and 2016). Accordingly, pre-tax NPV10 have ranged from A$15M (using a gold price of A$1,400 per ounce) to A$61M (using a gold price of A$1,600 per ounce and a silver price of A$22 per ounce), and with IRRs between 51% to 103% respectively (refer Table 6). The objective of the current PFS is to settle on the optimum mine plan and gold and silver deposit sequencing, the associated optimum processing route to recover the precious metals, and update the operating and capital cost estimates.
  • 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 funding package would largely fund the capex required to get the project into production.
  • The Red Mountain Polymetallic Project in Alaska, 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 concluded sizable maiden JORC 2012 resource estimate for the Red Mountain Project presents a number of strategic opportunities to WRM, from establishing a small starter operation to continued exploration on numerous prioritised existing targets in order to grow the size and value proposition.
  • The maiden resource places Red Mountain as an important VMS asset within a global context, and on a par with projects such as Red River Resources’ Thalanga Project in QLD and Heron’s Woodlawn Project in NSW, both currently going into production.

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 Minerals Limited. The author of this report does not own shares in White Rock Minerals 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
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.

Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

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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.