Ann: Rox Resources raises $4 million via Institutional Placement, page-21

I was surprised by the CR as Rox would have at least $4.5m in cash at this stage but it makes a lot of sense.

Rox suggests they had a lot of insto interest after the recent jump in the Deeps JORC to 3m oz Au. Strong interest meant they didn’t have to offer much of a discount (but of course if they had to buy 10m shares on market they would be paying 50 cents +).

But the CR isn’t just well priced shares for instos. Increasing the insto holding (now 22%) is a key goal to the company who want long term holders rather than hot money. Hawke’s Point is maintaining their stake in Rox at 13%.

Rox had the potential to raise 25% of their MC (see last AGM) in 12 months but did not want to change their capital structure cheaply when the SP was low.

$4m is deliberately a small CR, enough for their work program drilling and ongoing restart studies (metallurgy, scoping study etc) but not diluting too much cheaply.

Rox will soon tell us what the CR was for but their work program is obvious.

To restart the mine Rox need to produce a mineral Reserve rather than a resource.

When the time comes to raise the funds for their mine financiers are only interested in reserves, gold that has been confirmed by drilling rather than by modelling.

Right now well over 1m oz of Deeps gold resource is inferred and much of that that needs to be converted to indicated to be included in the Reserve.

That’s a big number but historical modelling of Youanmi notably the Independent Resource Model Report of the Youanmi Deeps Underground Gold Project in 2006 and Rox’s own modelling provides confidence that almost all the inferred gold will be part of the Reserve.

Transitioning all those gold ozs from inferred to indicated or measured is going to take a lot of relatively deep drilling.

It will cost in excess of $1m a month when they start the drilling campaign.

But Rox will have around $8.5m in cash and that will take them right through to the Scoping study and next JORC announcement around midyear. Following that will come the Reserve ann, the Definitive Feasibility Study and then the financing.

We also have the Near Surface Resource JORC to come (1m-1.5m ozs Au @ 3g/t imo), the ongoing regional drilling on the Youanmi Shear and Fisher/ Eureka exploration.

Exciting times ahead.