White Rock announces new deal with Sandfire Resources

By Megan Graham. Published at Jul 10, 2018, in Small Caps

White Rock Minerals Limited (ASX:WRM) this morning informed the market of a cornerstone investment and strategic relationship with Sandfire Resources NL (ASX:SFR).

The two companies have entered into a subscription agreement to formalise the strategic relationship regarding WRM’s globally significant high-grade zinc VMS Red Mountain Project in Alaska.

Through this agreement WRM will be able to benefit from SFR’s significant technical expertise to develop the Red Mountain Project, as well as further strategic support as the small cap moves to unlock the potential from its large strategic land holding.

WRM Managing Director and CEO, Matt Gill said: “White Rock welcomes Sandfire Resources as a strategic partner and cornerstone investor that shares White Rock's vision for the exploration and development of the Red Mountain Project.

“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 White Rock’s globally significant high-grade zinc VMS Red Mountain Project.

“White Rock looks forward to collaborating with Sandfire Resources as part of this new strategic relationship.”

However WRM remains a speculative stock and if considering this stock for your portfolio you should take all public information into account and seek professional financial advice.

The strategic relationship between WRM and SFR will comprise of the following:

  • A$2.5 million equity placement. A placement of 208,333,334 fully paid ordinary shares in White Rock at A$0.012 (1.2 cents) per share and the issue of 104,166,667 unlisted options to subscribe for White Rock shares to raise A$2.5 million.
    Following completion of the share placement, SFR will own approximately 14.2% of White Rock.
  • Technical Collaboration. The formation of a technical committee for the purposes of jointly collaborating in connection with the Red Mountain Project including identifying best options for advancement of the Project.
  • Option for Earn-in and Joint Venture over Red Mountain Project. SFR will have the right and exclusive option to enter into an earn-in joint venture agreement in relation to the Red Mountain Project, which option may be exercised prior to 31 December 2018. If the option is exercised, the parties will negotiate, agree the form of and enter into an earn-in and joint venture agreement reflecting the following principles:

- Stage 1: SFR to fund a total of A$20 million over four years to earn 51%, with a minimum expenditure by SFR of A$6 million in year one.

- Stage 2: SFR to fund a further A$10 million and deliver a pre-feasibility study over an additional two years to earn 70%, which may be extended by SFR for a further year in certain circumstances.

- Stage 3: White Rock may elect to contribute to the joint venture. If White Rock elects not to contribute, SFR can solely fund Stage 3 to earn 80% by completion of a definitive feasibility study.

- Stage 4: White Rock may elect to contribute to the joint venture. If White Rock elects not to contribute, SFR will earn 90% and White Rock's 10% interest will be earned from project cash flow.

- Project Management: WRM is entitled to continue managing the project for at least the first year of the earn-in and to be paid a management fee. Ongoing management responsibility of the project will be subject to annual review and after the first year will be at SFR's election.

  • Anti-dilution Protection. An anti-dilution right enabling SFR to maintain its interest in White Rock, subject to obtaining an appropriate ASX waiver.
  • Board Nomination Right. A board nomination right enabling SFR to nominate a non-executive director to White Rock's Board should SFR's shareholding interest in WRM reach 15%.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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