Sandfire and White Rock Enter Joint Venture for Red Mountain

Sandfire Resources (ASX:SFR,OTCQB:SRAFF) has taken junior miner White Rock Minerals (ASX:WRM) under its wing with an earn-in and joint-venture (JV) agreement over the latter’s Red Mountain asset in Alaska.

Red Mountain contains polymetallic volcanogenic massive sulfide (VMS) mineralization rich in zinc, silver and lead, with potential for significant gold and copper.

The AU$30-million agreement gives Sandfire the opportunity to earn a 51-percent stake in the project by spending AU$20 million on exploration over four years. For Sandfire to earn the stake, however, a minimum of AU$6 million must be spent on Red Mountain during the first year.

Sandfire can boost its interest to 70 percent by funding another AU$10 million and providing a prefeasibility study with an ore reserve. White Rock will then have the option to contribute its share in the asset — being 30 percent — to project funding; if it decides against it, Sandfire will solely fund a definitive feasibility study and earn an additional 10-percent interest.

Finally, Sandfire can earn up to 90 percent in Red Mountain if White Rock chooses not to financially contribute to the asset’s development. If so, White Rock must repay 10 percent of total development costs to Sandfire from 65 percent of its share of the project’s cash flow.

“Securing a high-quality partner with world leading expertise in the exploration and development of base metals projects is a strong endorsement to the quality and potential of our globally significant high-grade zinc VMS Red Mountain project,” CEO and Managing Director Matt Gill said in a statement.

With a tenement package that consists of 760 mining claims over a 475-square-kilometer area, Red Mountain holds “numerous” historic VMS prospects that have seen little modern exploration, according to White Rock Minerals.

Two previously identified deposits at the asset, Dry Creek and West Tundra, hold an inferred mineral resource of 9.1 million tonnes at 12.9 percent zinc equivalent for 1.1 million tonnes of contained zinc equivalent. Also included in the inferred resource are 678,000 tonnes of zinc, 286,000 tonnes of lead, 53.5 million ounces of silver and 352,000 ounces of gold.

As of March 22, zinc was trading at US$2,864 per tonne on the London Metal Exchange.

While Sandfire’s share price closed 3.9 percent lower at AU$6.65 on the ASX on Monday (March 25), White Rock’s stock price leapt 40 percent to AU$0.007.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.