White Rock Minerals Limited (ASX:WRM; OTCQX:WRMCF), (‘White Rock’ or ‘the Company’) announces the completion of the Merger with AuStar Gold Ltd (‘AuStar’).
The Merger of White Rock and AuStar was completed on 23 August 2021 and White Rock assumed ownership on that day.
Key Highlights
• Revised merger between White Rock and AuStar Gold has been implemented
• The Merger adds a large under-explored 670km2 gold exploration land package in Victoria, Australia
• Further, the Merger acquired a functional small scale high-grade underground gold mine and gold processing facility
• Immense regional and in-mine exploration opportunities exist.
Overview
White Rock has now taken possession of the Woods Point Gold Project, an asset that offers a significant value creation opportunity for shareholders.
Woods Point includes a highly prospective exploration area of 670km² in one of Victoria’s largest historic goldfields.
Part of the land package is a past-producing mine1 that has generated over 800,000 ounces at an average grade of 26.5g/t and an 80,000tpa gravity gold processing plant.
Importantly, the acquisition included a highly skilled and qualified workforce of some 23 personnel.
The asset comes into White Rock at a time when Victorian gold exploration and production is experiencing an exciting renaissance, led by Fosterville and Costerfield, now among the ten highest grade gold mines globally.
White Rock is taking a long term view on this opportunity. While its new mine has a potential to produce gold at grades that could put it in the top ten in Australia, its present priority is to stop the production to divert the focus towards underground exploration. This is in line with its goal of building a resource base sufficient for long-term production that will lead to a sustainable and profitable operations.
Figure 1 – Location of the Woods Point Gold Project (Source: Earth Resources Victoria)
The regional landholding has geological similarities with the Costerfield Mineralogical Domain that includes the Fosterville goldfield—which offers a vast longer-term investment opportunity.
White Rock intends to take some time to develop a strong strategy to ensure that a systematic and modern exploration program is executed across both the regional and in-mine priority targets.
Kempe Drilling Underground
The Team on site on Day One of the Merger
Managing Director and CEO, Matt Gill said:
“The acquisition of the Woods Point Gold Project in Victoria offers significant opportunities in this undervalued, in demand, large, highly prospective exploration tenement package located in one of Victoria’s largest historical goldfields.
The regional exploration and in-mine potential is significant, and any success here is enabled by the existence of an approved ML, and the small but high-grade functional underground gold mine (Morning Star) and its gold processing plant. Not many junior exploration companies can make that claim.
The addition of this asset compliments White Rock’s other assets—our silver-rich zinc VMS and IRGS gold project at Red Mountain in Alaska, and our advanced epithermal gold and silver project at Mt. Carrington in New South Wales (NSW).
One of White Rock’s strengths is its exploration, project development and mining expertise, and the company intends to bring its best on this asset.
Another advantage is being based in the historical gold mining town of Ballarat. Having an asset on our doorstep ensures that we can effectively manage and operate, even in this current restrictive COVID-19 environment.
We intend to pursue a systematic exploration program regionally, where the size of the prize is significant, as well as test the many opportunities that we believe still exist to be drilled and discovered underground at Morning Star.”
Dr Quinton Hennigh, advisor to White Rock’s major and strategic shareholder, Crescat Capital, said:
“The acquisition of AuStar gives White Rock control over one of the high-grade gems of the Victorian goldfields.
As the acquisition is not expected to significantly impact White Rock’s current exploration momentum in Alaska, it gives White Rock Shareholders exposure to a potentially high-value year-round exploration asset in one of the most prolific gold belts on earth.
Along with this comes the element of gold production at Morning Star which, after a hiatus while in-mine exploration drilling occurs, White Rock plans to ramp up to underpin White Rock’s cash flow going forward. Such an acquisition opportunity comes along rarely and is expected to help White Rock build a solid foundation upon which to grow.”
In-Mine exploration
Morning Star’s mine shaft descends 800 metres, with several stopes worked on by previous owners of the asset.
The most notable previous owner was Gold Mines of Australia (GMA), the forerunner to one of Australia’s best-known resources companies—Western Mining Corporation (WMC).
There are considerable opportunities in several areas that have seen little work, in particular the Gap Zone.
Figure 2 – 3D model of the Morning Star gold mine, dyke, known reefs and mine development
Drilling has been started, with a second drill commencing soon.
With drill results taking less time in Victorian labs than in some other jurisdictions, it allows quicker turnaround and assay newsflow going forward.
To understand what structures have the greatest grade and ounce potential, the first step is to conduct structural studies using historical production figures and previous drilling. This will help define future exploration targets for follow-up drilling.
Currently, two diamond drill rigs are running full-time underground to test the full length and depth across the Gap Zone. While extensions to known reefs above 9 level are yet to be fully tested.
The gold processing plant is in excellent working condition. With its recent improvements and further modifications, better long-term economics is achievable. It can be accomplished by being disciplined enough to halt production while gold resources are defined, as opposed to pursuing a ‘hand-to-mouth’ approach that can be unpredictable and unfavourable for profitable mining and to shareholders.
The Morning Star Mine shaft and gold processing facility
Regional exploration
Although numerous historic prospects lie across the 670km2 exploration package, minimal systematic prospect exploration has been done to date. The public records of modern drilling showed sparse coverage.
The area includes over 50 prospects1, predominantly dyke-hosted quartz vein mineralisation, with the ‘prize’ being the discovery of another Walhalla’s Cohen Reef, a dyke–margin quartz reef with continuity over 1,500m at high grade (~1Mozs @ ~1oz/t).
Figure 3 – Tenement map highlighting the Woods Point land package in yellow
Systematic modern exploration using advanced geophysics, modern geochemical analysis and detailed structural studies will form the basis of the regional exploration approach.
The terrain within the land package is extreme, and it will take time, commitment and energy to complete a comprehensive systematic exploration to identify new targets.
White Rock’s exploration strategy will provide a balance between near-term production opportunities in mine at Morning Star, near-term drill targeting of historic prospects with high-grade discovery potential and the long-term generation of new targets over a multi-year exploration campaign.
Underground drilling at Morning Star is already underway. Drill testing of regional historic mine prospects is expected to commence over the coming summer months once permitting and access is established.
The first priority target is the Wallaby prospect, followed by a pipeline of drill targets at other historic mine prospects and new targets generated from regional exploration activities.
Key benefits to investors
White Rock investors benefit from this project’s inclusion in the company portfolio in a number of ways:
Firstly, there are clear benefits in applying a better capitalised balance sheet to an undervalued high-quality asset that has seen little investment.
Along with more capital, the new exploration and mining approach to the Woods Point Gold Project could create a significant Shareholder value.
In building a resource inventory through underground exploration with a well-defined production plan will secure a longer-term value generation.
Despite the world burdened by COVID restrictions, there are improved logistics to successfully manage a Victoria-based project.
Confidence in the project remained high with it being handled by a Victoria-based management and team that brings rich Victorian gold experience and networks.
Further, Woods Point will deliver year-round newsflow to offset the seasonality of news from the Alaskan project, Red Mountain / Last Chance.
Through the merger and acquisition, White Rock emerges as a larger, formidable ASX and OTCQX listed player, with greater optionality and more diverse assets.
White Rock’s management is very pleased to have concluded the Merger, and to provide investors with the chance to benefit from this opportunity.
*This announcement has been authorised for release by the board.
Contacts
For more information, please contact:
[one-half-first]Mr Matthew Gill
Managing Director & CEO
[email protected] [/one-half-first]
[one-half]Mr Alex Cowie
Media & Investor Relations
[email protected][/one-half]
About White Rock Minerals
White Rock Minerals is an ASX listed explorer and near-stage gold producer with three key assets:
• Woods Point – New asset: Victorian gold project. Bringing new strategy and capital to a large exploration land package and high-grade mine (past production >800 Koz @ 26g/t).
• Red Mountain / Last Chance – Key Asset: Globally significant zinc–silver VMS polymetallic and IRGS gold project. Alaska – Tier 1 jurisdiction.
• Mt Carrington – Near-term Production Asset: “Shovel Ready” advanced gold and silver asset being advanced by JV partner.
References:
1 Department of Primary Industries “Walhalla-Woods Point-Tallangallook Special map area geological report, Geoscience Victoria’, Geological Survey of Victoria Report 127, 2006.