Rokmaster Zips into Zinc
In another universe far far away Rokmaster Resources had a gold/copper project in Peru. The market blew up, they blew up but they came back to life in November of 2016 when they did a deal on the Duncan Lake zinc property in southeast BC.
My article was pretty accurate but it described a successful management team picking up a nice project in Peru. And other than me getting a bottom call dead wrong, it talked about a company that has totally changed in 3.5 years.
Rokmaster is probably correct to go after zinc. It’s been no secret for years that a lot of capacity for zinc has disappeared either through mines running out of ore and closing or mining capacity being shut down. Zinc is in shortage - will go into more shortage. It’s a good time to advance a zinc project as zinc is projected to be as high as $1.50 US a pound by 2020.
A predecessor of Teck, Cominco, worked the Duncan Lake project from 1989 to 1997 and did 8,300 meters of drilling in a dozen holes. Drilling revealed a high-grade lead/zinc mineralization extending some 2.3 km from the old Duncan Mine northward. Excellent results included 7.3 meters estimated true width of combined 10.42% lead/zinc in hole C89-5 and 7.5 meters estimated true width of 12.50% combined lead/zinc in hole C97-12.
Lead and zinc prices declined, Cominco was taken over by Teck and the property was abandoned. Local prospectors picked up the project and optioned it to Rokmaster. The deal closed in January of 2017. Terms of the agreement are interesting, Rokmaster is paying a lot for the project but only in shares based on certain milestones. Rokmaster paid 12 million shares for a 100% interest in the Duncan Lake property subject to a 2.5% NSR.
An additional 48 million special warrants were issued with 12 million warrants converting into shares with a mineral resource of 3 million tonnes of 6% combined lead/zinc, an additional 12 million special warrants turning into shares with a resource of 6 million tonnes of 6% combined lead/zinc and a final 12 million special warrants converting when the project begins commercial production.
At first glance it seems pretty expensive to issue shares equal to 30% of the company for an exploration project albeit an attractive property but it puts the company in much the same position as the US Federal Reserve. Paper is cheap. Actually I think it’s a good deal for both the company and the vendors. Rokmaster doesn’t have to spend any cash dollars to get the property, all the money can go in the ground.
If you use the great Rocks in the Box URL from Kitco, and you put in values of 3% lead and 3% zinc at today’s price, you come up with a value of $141.54 in the ground. And if you multiply that times 3 million tonnes, you get $424.6 million and double it for 6 million tonnes. It gives Rokmaster time and opportunity to get their feet on the ground and get drills turning in an environment that should be excellent for zinc.
Rokmaster was in the hole financially, owning some $1.45 million to directors, officers and certain arm’s length vendors. They all agreed to accept shares for debt so Rokmaster is starting out clean. The company closed a final tranche of a private placement at $.05 shares on April 6, 2017 bringing in a total of $685,000 in two tranches.
The company is cashed up and has a drill permit in hand. They don’t have a lot of cash but could bring in another $800,000 by accelerating warrants if the price of shares stays above $.10 a share over a 10-day consecutive period.
To the extent that all shares in junior mining companies are lottery tickets, those that pay off, pay off well but most expire worthless. Rokmaster has come out of the ashes like a Phoenix. They have a management team, they have a nice potential project and they have cash in the bank and are permitted. I would expect them to announce a drill program shortly and the price of the shares will go up and down based on results and investor interest in zinc.
Rokmaster is an advertiser and naturally I am biased as a result. I did participate in their latest private placement. They have done an excellent job on their presentation and anyone interested in the company should review it.