Sandfire to spend up to $30m in Alaska JV

Sandfire Resources has announced an earn-in and joint venture option agreement with ASX-listed White Rock Minerals for a stake of up to 70 per cent in the multi-commodity Red Mountain project in central Alaska.

Under the deal, White Rock will allow Sandfire to farm-in at its fully-owned Red Mountain, a zinc and precious metals project.

Sandfire can earn a 70 per cent stake in Red Mountain by spending $30 million on exploration and delivering a pre-feasibility study with an ore reserve within a six-year period.

In the first stage of the agreement, Sandfire can acquire 51 per cent of Red Mountain if it spends $20 million on exploration over four years, with $6 million in the first year.

Sandfire can increase its interest the project to 70 per cent during a second stage, which involves spending an additional $10 million and completing the pre-feasibility study (PFS) within the following two years.

Once Sandfire completes the PFS, Victoria-based White Rock can contribute its percentage share of funds towards a definitive feasibility study in stage three to retain a 30 per cent interest.

In July, Sandfire has entered into a strategic relationship White Rock, which included a $2.5 million equity investment and an option to earn-in to the Red Mountain project.

White Rock managing director Matt Gill said the agreement was significant as it provided a funding pathway to advance Red Mountain.

“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 volcanogenic massive sulphide Red Mountain project,” he said.

Red Mountain is Sandfire’s second project in North America, as the company also has an 86-per cent interest in the Black Butte copper project in the US state of Montana.

Last month, Sandfire Resources reported a first-half profit fall of 18.8 per cent, which miner said was due to increased exploration and project costs.

The company is ramping up exploration and project development efforts, as its flagship DeGrussa copper-gold mine is set to be exhausted by 2022.

Shares in Sandfire closed down 3.9 per cent to trade at $6.65 each.