White Rock Minerals Ltd (WRM)

Aggressive exploration at Red Mountain for 2018

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 Red Mountain VMS polymetallic project in Alaska. Alaska will be the focus for WRM during 2018 as it starts to ramp up an aggressive exploration program for the upcoming Alaskan field season. We believe there is potential for WRM to increase resources and possibly to establish a new, 100% owned, VMS camp just 100km south of Fairbanks.

Key Points

  • Red Mountain is an advanced project with plenty of upside: 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).
  • Significant maiden resource: In 2017 WRM completed a maiden resource estimate for Red Mountain of 16.7Mt at 8.9% Zn equivalent (ZnEq), placing it on a par with projects such as Red River Resources’ Thalanga Project in QLD, now in production, and Heron’s Woodlawn Project in NSW. We believe a resource double that size would place WRM on a development footing.
  • Aggressive exploration program: WRM has now defined its exploration program for the forthcoming 2018 Alaskan field season. Beginning in March/April, WRM intend to undertake up to 6,000m of a diamond drilling campaign to expand resources and identify additional areas of mineralisation; undertake high-powered geophysics to refine drill targets on the best of over 30 existing geophysical and geochemical anomalies; undertake further surface mapping sampling to assist in target definition; and, evaluate the potential for gold mineralisation, common in zoned metal systems, but as yet, untested.
  • PFS completed on Mt Carrington: In December 2017, WRM completed a pre-feasibility Study (PFS) on a gold-only, Stage 1 development. A silver dominated, Stage 2 development is still under consideration, but more work needs to be done to establish its viability.
  • Stage 1 technically and financially viable: WRM established the viability of the Stage 1 development, with total cashflow of A$36.7m (undiscounted, pre-tax) over a 4.3 year mine life, at an average annual production rate of 35,000 ozs at an AISC of A$1,236/oz.
  • Valuation: We maintain our valuation estimates of $52.7m for Red Mountain based on previous M&A transaction history in the VMS space and $17.3m for Mt Carrington, as the increased gold output and longer mine life associated with the Stage 1 of the PFS study is balanced by more uncertainty around the value of the Stage 2, silver-dominant mineralisation.
  • Recommendation: We place a Speculative Buy recommendation on WRM with a 12-month price target of $0.04 per share based on a successful exploration program and high associated newsflow from the Red Mountain Polymetallic Project over the course of 2018.

Disclosure and 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 unlisted options 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 Adviser to White Rock Resources 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.