Shareholders of WA gold explorer Rox Resources (ASX: RXLDB) approved the demerger of its nickel and base metal assets at the company’s General Meeting this week, freeing the company to focus on its flagship Youanmi gold project, about 480km north east of Perth, near Mt Magnet.
At the same meeting, shareholders also gave the green light to a 1-for-15 share consolidation which, combined with the demerger of assets, was described as a ‘company reset’ by Managing Director Alex Passmore.
Under the demerger, Rox’s Fisher East and Collurabbie nickel and base metal assets are being spun out into a new company Cannon Resources Limited. Eligible Rox shareholders will receive new Cannon Resources shares via an in-specie distribution and can participate further through Cannon’s IPO if they wish. The IPO includes a public offer to new investors and a priority offer to eligible existing Rox shareholders.
Rox’ share price closed the week at 48.5¢ per share.
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Mr Passmore said exploration and development of the nickel and base metal assets would be more easily funded and progressed within Cannon Resources – to be led by managing director Steve Lynn – allowing Rox to focus on continuing to progress the Youanmi gold project.
Rox bought into the Youanmi gold project in June 2019 and is currently 70% owner with Venus Metals Corporation holding the balance.
Last week Rox announced a 39% increase in Total Mineral Resources at Youanmi, increasing the previous estimate by 466 koz to 1,656 koz of contained gold.
In the past 18 months, the joint venture has completed more than 48,000 metres of drilling at Youanmi, which historically was a high-grade gold mine. It previously produced 670,000oz at 5.4g/t Au before it closed in 1997. Indeed, the last parcel of ore mined underground at Youanmi in November 1997 came out at 14.6g/t Au.
Mr Passmore said the 466,000 oz of gold added to the resource at Youanmi came at a discovery cost of just $16 per ounce, well below industry averages.
The project’s Near Surface Resource increased by 50% to 800koz Au, with the Deeps Resource increasing 30% to 856koz Au with a high average grade of 7.9g/t Au.
Rox reported a Maiden Resource for the recently discovered Grace prospect of 109 koz of contained gold at 7 g/t, with upside potential remaining.
Mr Passmore explained to shareholders that Youanmi appeared to lend itself towards a modest open pit return to mining, followed by a high-grade underground operation using the existing decline as a starting point to reduce costs.
Being an existing mine site, Youanmi is classified as a disturbed site and is on existing mining leases. Although dewatering is required, Youanmi is well serviced by existing infrastructure including an airstrip, borefield and tailings disposal facility, offices and a mine village suitable for exploration crews.
Mr Passmore said with the share consolidation and demerger of the nickel assets into Cannon Resources, Rox was focused on growing the resource base at Youanmi and progressing feasibility studies with the aim of restarting production at the historic gold mine.
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