The option was exercised under a subscription agreement signed by the companies in July this year.

At that time, White Rock and Sandfire started a strategic relationship over the Red Mountain project.

Pursuant to the subscription agreement, the companies are required to negotiate the terms of the JV within three months.

Sandfire can earn a 51% interest in the project by funding a total amount of A$20m ($14.1m) over a period of four years. Thereafter, the company can increase its ownership in the project to earn 70% by funding an additional A$10m ($7.05m) and delivering a pre-feasibility study (PFS). These two steps constitute the first two stages of the JV deal.

In the third stage, if White Rock decides not to contribute to the JV, Sandfire can solely fund a definitive feasibility study to earn 80%. The company can raise its stake to 90% if White Rock chooses not to contribute.

White Rock Minerals managing director and CEO Matt Gill said: “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 our strategic relationship and this JV agreement.”

The Red Mountain project will be managed by White Rock for at least the first year of the earn-in. Sandfire will have to pay the company a management fee of 10% above all project expenses.

The project is located 100km south of Fairbanks in the Bonnifield Mining District and comprises 224 mining claims covering an aggregate area of 143km².

It is estimated to contain an inferred mineral resource of 678,000t of zinc, 286,000t lead, 53.5 million ounces of silver and 352,000 ounces of gold.