Rox Resources’ new managing director Rob Ryan has wasted no time, shoring up about $9 million in his first three weeks on the job for a pre-feasibility study and resource growth drilling at the Youanmi gold project.
Rox (ASX: RXL) backed up its scoping study for Youanmi, near Mt Magnet in WA, with a $4 million placement at 16.5¢ per share and will launch a $1 million share purchase plan at the same price next week. The company also announced its intention to accept a takeover offer for explorer Cannon Resources (ASX: CNR), which would deliver Rox another $3.8 million for its 10 per cent holding in the target.
Canaccord Genuity, Taylor Collison Limited and RM Corporate Finance acted as joint lead managers for the placement. Rox’s largest shareholder, Hawke’s Point, has signed on for about $660,000 on a pro-rata basis to maintain its 13.18 per cent holding.
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Mr Ryan told Investor Insight the strong interest from new and existing shareholders as well as Hawke’s Point’s ongoing support were proof the company’s Youanmi strategy to pursue cashflow from high-margin ounces ticked the right boxes.
“I have been following Youanmi for some time and the progress made to date is a testament to the hard work of the team and the strength of the project,” he said.
“The interest we received in the placement just goes to show that the market will get behind good projects backed by experienced leadership, and I look forward to progressing Youanmi through the next stages of development.
“The takeover offer for Cannon was a fantastic outcome that will generate another $3.8 million without diluting our register.”
The scoping study, published on October 19, focused on a project producing 71,000ozpa – in a mix of gold-in concentrate and carbon-in-leach bullion – at an average grade of 5g/t for a total output of about 569,000oz over an eight-year mine life. With pre-production capital expenditure of $100 million, Youanmi has a modest price tag for generating cashflow in a high inflationary environment.
Mr Ryan said the scoping study prioritised the high-grade, low-cost ounces of the Younami resource through the production of gold-in-concentrate. But Rox would not neglect the rest of the resource of 3.2 million ounce grading 3.57g/t.
“We’re only scratching the surface of Youanmi’s potential. Once we are generating cashflow, we can expand production and take advantage of economies of scale to profitably incorporate lower grade ore,” he said.
Mr Ryan, who took on the job three weeks ago after serving on Rox’s board as a non-executive director since June, said he expected the pre-feasibility study to take about 12 months, in which time he hoped to significantly expand on Youanmi’s potential and work toward a maiden reserve for the project.
“There are many highly profitable Australian gold concentrate producers. In fact, gold concentrate accounts for about 12 per cent of the world’s gold production,” he said.
“The Youanmi point of difference is our concentrate’s low arsenic content. At about 2 per cent, it is well below the 6 per cent threshold required by international standards and does not need to be blended.
“We are already experiencing early interest from potential offtake partners.”
