The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Cuts deal to acquire AuStar, an emerging Aussie gold producer North of 60 Mining News – February 5, 2021
A drill tests the Last Chance gold target on White Rock Minerals' Red Mountain project in Alaska.
The mill and other surface facilities at AuStar's Morning Star gold mine in eastern Australia.
White Rock Minerals Ltd. and AuStar Gold Ltd. Feb. 2 announced plans to merge into a larger mining company with a world-class portfolio of assets that include the large Red Mountain silver-zinc-gold-lead and Last Chance gold projects in Alaska, and a portfolio of exploration to producing gold assets in Australia.
Under the arrangement proposed by the two companies, White Rock will acquire AuStar by issuing 0.78 White Rock shares for every AuStar share issued to shareholders.
This implies a price of A43.5 cents per AuStar share, roughly a 47% premium based on the Feb. 1 share price of the company.
The merged company will retain the name White Rock Minerals, with Austar expected to continue to operate as a wholly owned subsidiary.
White Rock and AuStar management say this larger company is expected to benefit from significant management and corporate synergies, a strongly enhanced balance sheet, an enhanced profile in the North American and Australian capital markets, and access to a continuing cohort of talented geologists and experienced mining professionals.
The board of the merged group is expected to include three current White Rock directors – Chairman Peter Lester and Managing Director and CEO Matthew Gill, and Jeremy Gray – and two AuStar directors – Paul McNally and Christopher Wellesley.
The expanded White Rock Minerals will benefit from the geographic proximity of Gill, who is a former non-executive director of AuStar and is deeply familiar with the company's Australian gold assets.
"I am extremely pleased to be announcing this transaction, which delivers for AuStar Gold shareholders a certain path forward to accelerated activity on the company's world-class Victorian gold tenements, as well as the benefit of exposure to White Rock's high-potential exploration and development assets in Alaska and New South Wales," said McNally. "I am particularly pleased to be able to continue my active involvement with the enlarged company, and to again be working with my former colleague Matt Gill, who I am sure will provide effective and dynamic leadership of a company with a hugely compelling suite of assets and opportunities."
AuStar brings the permitted and commissioned Morning Star gold mine to the merged company.
A high-grade underground operation, Morning Star lies in the Walhalla-to-Woods Point goldfield about 75 miles (120 kilometers) east of Melbourne, Victoria. This mine is reported to have historically produced more than 875,000 ounces of gold from ore that average 26.5 grams per metric ton gold.
AuStar holds a roughly 259-square-mile (670 square kilometers) land package at Morning Star that hosts 36 gold exploration targets in the Walhalla-to-Woods Point gold belt.
"White Rock is delighted with the prospect of adding high potential Victorian gold exploration, including a modest production base, in one of Victoria's most prolific historical gold production regions to its portfolio," said White Rock Chairman Peter Lester. "With the Morning Star mine and processing plant in place, AuStar will also move White Rock closer to being a producer and open up exposure to the growing Victorian exploration and mining scene which has enjoyed a considerable resurgence in recent times. The combination of our two companies and the pursuit of the new opportunities in Victoria will add to the 2021 programs already in place for White Rock's existing assets in Alaska and provide greater opportunity for growth for both groups of shareholders. I look forward to working with the two AuStar directors in achieving this aim."
White Rock's Alaska assets include the Red Mountain land package within Alaska's portion of the Tintina Gold Belt, a particularly gold-rich province.
Red Mountain is best known for its zinc-rich volcanogenic massive sulfide deposits and occurrences at the eastern and southern ends of the 308-square-mile (798 square kilometers) property.
Two VMS deposits that have been defined so far – Dry Creek and West Tundra Flats – host 9.1 million metric tons of Australian Joint Ore Reserves Committee- (JORC) compliant inferred resource averaging 5.8% (1.17 billion pounds) zinc; 2.6% (516 million lb) lead; 0.1% (26.5 million lb) copper; 157 g/t (46.1 million oz) silver; and 0.9 g/t (260,000 oz) gold.
During the 2020 Alaska exploration season, White Rock focused its exploration on Last Chance, an emerging gold target at the western end of the property.
The highest grade intercept from White Rock's initial drilling at Last Chance was 1.2 meters averaging 24.8 g/t gold in hole LC20-07.
Overall, the company says the assay results from the 2020 Last Chance program show a large system of strongly anomalous arsenic and antimony consistent with what has been interpreted to be the upper brittle levels of a large orogenic or intrusion related gold system.
White Rock's pre-merger portfolio also includes Mount Carrington, a pre-development staged gold project in New South Wales, Australia.
A road accessible project about a four-hour drive from Brisbane, Mount Carrington hosts 6.28 million metric tons of resource in a gold-dominant zone that averages 1.4 g/t (277,000 oz) gold and 2.2 g/t (444,000 oz) silver; and 12.49 million metric tons of resource in a silver-dominant zone that averages 0.2 g/t (64,000 oz) gold and 57 g/t (22.8 million oz) silver.
Management from both companies said the enlarged White Rock Minerals is expected to hit the ground running, with a focus on accelerating exploration of the Victorian tenement portfolio, growing production at Woods Point, and further developing the Alaska and Australian assets already in the White Rock portfolio.
"The acquisition of AuStar will give White Rock control over one of the high-grade gems of the Victorian gold fields. 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 production at Morning Star which White Rock plans to ramp up to underpin White Rock's cash flow going forward," said Quinton Hennigh, a technical advisor to White Rock Minerals. "Such an acquisition opportunity comes along rarely and is expected to help White Rock build a solid foundation upon which to grow."
Pending shareholder and court approvals, the merger is expected to be finalized in late May.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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