Rox Resources Limited (ASX: RXL) is a gold exploration and development company. The company operates the Menzies Gold Project in the Eastern Goldfields of Western Australia.
The company today, on 10th April 2019, has updated that it has entered into a binding term sheet with Venus Metals Corporation Limited (ASX: VMC) under which the company has the right to acquire a majority position in the Youanmi Gold Mine and to take on management/operatorship of the historic Youanmi Gold Mine (OYG Joint Venture).
The Youanmi Gold Mine is currently held by Oz Youanmi Pty Ltd (“OYG”) and is on care and maintenance. VMC is a party to a Call Option Deed, according to which it has been granted the option to acquire all of the issued share capital in OYG on or before 30th June 2019.
VMC also holds a significant regional tenement position in its own right and as a 90% participant in a joint venture with a third party. The agreement between Rox and VMC also sees two other joint ventures formed: the VMC Joint Venture, and the Youanmi Joint Venture, granting Rox the right to earn 50% and 45%, respectively, of the gold rights on those tenements.
VMC is to be the manager of these joint ventures initially with Rox to take over operatorship if it elects to move to a 70% interest in the OYG Joint Venture.
The company’s Chairman, Mr. Stephen Dennis commented that the acquisition of the Youanmi Gold Project is consistent with the company’s stated objective of acquiring near-production assets within its financial capacity.
As regards the mineral resource estimate, in 2018, Widenbar and Associates completed a JORC 2012 compliant Mineral Resource Estimate for the Youanmi Gold Mine of 12.4Mt at 2.97g/t Au for 1,190,600 ounces of gold.
To give effect to this transaction regarding OYG Joint Venture, the company is slated to initially acquire a 50% interest in the OYG Joint Venture by providing funding of $2.8 million, which is to be applied to the cash component of VMC’s option exercise to acquire the OYG tenements. Besides that, the company is to issue VMC $0.2 million in Rox scrip, at a deemed price of $0.008 (25m shares). The company is also required to meet exploration expenditure of $2 million over the following two years (to June 2021) and to cover the costs of holding and managing the project.
The investment rationale behind this strategic acquisition is a substantial gold project that has not been mined since 1997. The gold price was ~A$400/oz – A$450/oz in the year that mining operations ceased. The company considers there to be a strong potential for the resources in and around historic pits to have economic prospects at the current gold price of A$1820/oz.
Rox will fund aggressive exploration in the project area through three joint ventures formed with VMC. On the stock-performance front, the stock has posted the YTD return of -42.86%. The company also has posted a return of -27.27% over the past six months. While writing, i.e., on the 10th April 2019 AEST 2:30 PM, the stock of the company is trading at a price of A$0.009, up 12.5% during the day’s trade with a market capitalisation of ~A$10.07 million. The stock opened the trading day at A$0.011, which was also its intraday high, and touched the intraday low of A$0.009, with a daily volume of ~ 21,611,488. It had a 52-week high price of A$0.015 and a 52-week low price of A$0.007, with an average volume of 1,243,983 approximately.
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