ASX and Media Release: 20 October 2016 ASX Code: WRM
Initial Mining review demonstrates significant upside potential at Mt Carrington
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ASX Code: WRM
Issued Securities
Shares: 551.6 million
Options: 100.5 million
Cash on hand (30 June 2016)
$0.26M
Market Cap (19 October 2016)
$8.2M at $0.015 per share
Directors & Management Brian Phillips
Non-Executive Chairman
Matthew Gill Managing Director & Chief Executive Officer
Geoffrey Lowe
Non-Executive Director
Peter Lester
Non-Executive Director
Shane Turner Company Secretary
Rohan Worland Exploration Manager
For further information, contact: Matthew Gill or Shane Turner Phone: 03 5331 4644
[email protected] www.whiterockminerals.com.au
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White Rock Minerals Ltd ("White Rock") is pleased to confirm that a review of the Mining section of the Mt Carrington gold - silver Project Scoping Study1 has highlighted that there is considerable upside potential for expanding the in-pit Mineral Resource, which could then flow through to increased mine life and / or higher gold and silver production rates.
This potential uplift would further enhance the strong financial metrics of the Project, where the current Scoping Study results already deliver an outstanding investment proposition - a Project with a pre-tax NPV10 of A$60.6M2 and an IRR of over 100%, with A$100M in free cash (undiscounted and before financing) delivered over its initial 7 year mine life3.
2 The Mt Carrington Scoping Study considers an NPV accuracy of +/-30%, ranging between $42M and A$78M.
3 The in-pit Mineral Resource is made up of a combination of Indicated (70%) and Inferred (30%) JORC Resource blocks. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The material assumptions and modifying factors considered to form reasonable grounds for stating the production targets and forecast financial information related to the Mt Carrington Project Scoping Study are contained in Annexure A.
As a result of this initial Mining review, a key element of the upcoming Feasibility Study will be to investigate a range of parameters associated with selecting the optimal plant size and mining rate to maximise the economic returns from the Project. The optimisation work will consider:
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Plant throughputs between 800,000 to 1,200,000 tonnes per annum;
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Reduced mining and processing costs as a result of this larger tonnage throughput;
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An increased gold equivalent4 production profile up to and exceeding 40,000oz per annum initially,
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Whilst still retaining an initial 6 to 7 year mine life.
Importantly, the initial pit designs have highlighted that Feasibility Study optimisation work could result in:
Initial work by Mining Plus, a fully integrated global mining consultancy, saw a high level review of the detailed mining section of the Scoping Study conducted. Ongoing review, detailed mine planning and scheduling, and optimisation of the Project's in-pit Mineral Resource will form a key component of the Feasibility Study, scheduled to commence in December 2016.
This work has advanced the project through the initial design of the first five mine pits, the site layout, waste dumps and mine scheduling (Figures 1 & 2).
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In addition, Mining Plus have highlighted a number of areas in the Scoping Study that will be focused on to realise improved economic outputs that could further enhance what is already a compelling financial investment case5.
Additional areas of mine optimisation during the Feasibility Study will include:
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Pit sequencing and Pit production staging;
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Geotechnical slope design of fresh material;
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Re-optimisation of the pits;
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Reduced dilution;
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Fleet optimisation; and
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Waste haulage optimisation.
MD & CEO Matt Gill said "This Mining review has highlighted that the nature of the mineralisation at Mt Carrington provides significant upside potential through more detailed mine design at the feasibility stage. The broad zones of mineralisation that continue beyond the pit shells from earlier scoping studies provide significant increased ore tonnes that move into the pit once optimisations are accounted for in the ultimate pit design. A key focus of the upcoming Feasibility Study will be the bringing together of the necessary integrated technical expertise able to realise the maximum economic return from Mt Carrington through smart design work such as this at the Feasibility stage of the Mt Carrington gold-silver project.
White Rock secured a transformational financing package with Cartesian Royalty Holdings (CRH) in June 20166, whereby the future streaming financing component (Phase II) provides for the construction and commissioning of the Mt Carrington Project with repayments to be made from a percentage of future gold and silver production from Mt Carrington. Hence, the future Phase II repayments do not require White Rock to undertake dilutive share issues to raise this construction financing.
This finance package is intended to help White Rock achieve its strategic goal of becoming a cash- generative gold and silver producer.
This innovative financing agreement with CRH provides White Rock with a long-term supportive strategic partner. The funding proposal will not only assist to advance the Mt Carrington gold - silver Project through feasibility and permitting, but will also directly fund construction and commissioning through to commercial production, subject to the delivery of a successful Definitive Feasibility Study.
The compelling financial metrics from our recent scoping study, enhanced by this recent Mining Review, and backed by a construction finance facility, give us great confidence that we now have the keys to unlock the significant potential of the Mt Carrington asset for all stakeholders."
1 Refer to Annexure A, which provides the material assumptions and modifying factors considered to form reasonable grounds for the stating of the production targets and forecast financial information related to the Mt Carrington Project Scoping Study. Earlier ASX releases relating to scoping studies at the Mt Carrington Project are dated 29 March 2016, 30 September 2015, 16 September 2014 and 31 July 2012.
4 Gold equivalent production target calculations are based on the gold production plus silver production estimated from the Scoping Study using the assumptions (gold price, silver price and metal recovery) provided in Annexure A. The price assumptions are A$1,600/oz for gold and A$22/oz for silver.
5 Refer to release to the ASX of 20 September 2016 - "Potential Upside Opportunities in Scoping Study Mining Review".
6 Refer to release to the ASX of 27 June 2016 - "WRM Signs Transformational Financing Package with Cartesian Royalty Holdings". The Transactions contemplated by the Term Sheet are subject to various conditions including the completion of due diligence to the satisfaction of CRH, certain White Rock shareholder approvals, and the entry into definitive documentation for Phase 2 (streaming financing), as set out in more detail in the ASX announcement of 27 June 2016.
300 metres
Figure 1: Aerial view towards the south-west looking down on the preliminary pit designs for the Strauss and Kylo gold deposits, and showing their close proximity to the processing plant layout which will utilise the existing foundations and haul roads.
(ASX Announcement "Potential Upside Opportunities in Scoping Study Mining Review" dated 20 September 2016.)
LEACHING
CRUSHING
LIME SILO
ADSORPTION
REAGENTS
GOLD ROOM
FLOTATION CIRCUIT
FINE ORE STOCKPILE
GRINDING
Figure 2: Aerial view looking towards the north and looking down on the preliminary processing plant layout utilising the former ROM pad and existing foundations.
(ASX Announcement "White Rock's Mt Carrington updated Scoping Study Delivers Justification For Feasibility Study" dated 29 March 2016).
For more information about White Rock and its Projects, please visit our website www.whiterockminerals.com.au
or contact:
Matt Gill (MD&CEO) or Shane Turner (Company Secretary) Phone: +61 (0)3 5331 4644
Email: [email protected]
This announcement has been prepared for publication in Australia.
This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in any other jurisdiction.
Competent Persons Statement
The information in this report that relates to exploration results is based on information compiled by Mr Rohan Worland who is a Member of the Australian Institute of Geoscientists and is a consultant to White Rock Minerals Ltd. Mr Worland has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Worland consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.