Ann: Major Growth Drilling Program Commences at Youanmi, page-7

This is a very smart drilling campaign, crafted with international support from Hawke’s Point?

There is a mix of inexpensive, high-confidence drilling and also exploratory holes that could unearth another Younami or Penny. As well, there is drilling to better understand the structural geology of the ore body to inform the next drilling campaign.

The focus on inferred gold near the Stopes at United North and Pollard etc is all about delivering more gold to the mining plan as cheaply as possible. The conversion of indicated gold in the MRE to the mining plan is about 50%. That’s average, Westgold’s PFS is similar, but it means half the MRE gold didn’t make it into the PFS mining plan.

The current drilling focused on shallow inferred Stopes (the mining tunnels) is not only high confidence but being close to Stopes it will translate into a high conversion to the mining plan.

Gold close to Stopes will go straight into the mining plan. This is a very cost-effective way of cheaply adding resource ozs, even cheaper as Rox has traded equity for some of the drilling. The AISC on the new gold will also be similar or even lower than in the PFS while the Capex will be similar. There is also potential to lift the grade of gold in the mining plan. In particular, United North has lode-style mineralisation with historical grades to 12g/t.

Paddy’s has had some impressive hits below 200m and it’s well worth more drilling. The deep Youanmi lodes are irregular with sections with low-grade or no gold at all and others having very high-grade gold. Rox has already had a spectacular bonanza intercept 28m @ 34.82g/t Au and the quartz lode is 6m wide. That hit sent the share price to 46 cents and further drilling at Paddy’s could repeat that.

Drilling between the relatively unexplored Paddy’s and Pollard zone could lead to the discovery of a high-grade gold system. Drilling at the 6-mile bore Igneous complex is exploration. This target has promising sulphide mineralisation associated with gold in the Shear Zone, a long shot but worth a shallow RC hole. To sum up, this clever drilling campaign will deliver a lot more gold straight to the mine plan at a low cost and could also provide some game-changing discoveries as well as structural insights to guide the next drilling on the way to the DFS. Perhaps a CR will be needed to fund further drilling but the sale of Fisher Gold and Eureka is more likely imo.

Rox has a PFS production target of 786koz and an assumed price of gold of $3,100 oz Au. Today’s price of gold is $3,740. Lift that assumed POG to $3,500 and Rox could achieve the same free cash flow as the PFS by adding just 100,000 oz of new gold to the mining plan. The potential of Pollard alone is 110koz to 269koz. Note that the reserve does not need to be 100% of the production target for a DFS, approx. 90% is acceptable