Is a recession imminent? Probably say the experts.
This is a mixed blessing for Rox. The price of gold will rise in a recession. From 2007 to 2011, the price of gold doubled. Recession/market turmoil = higher gold prices. A higher POG will dramatically improve the already strong Youanmi feasibility metrics. But while grade is king and Rox has very high-grade ore, the queen is capital. In a recession, cash is king and capital supply tightens. That will make it harder for Rox to find the Capex needed to build the Youanmi mine if capital is very tight when they release the DFS next year. At the same time gold companies in production will be cash cows. That combination of high profits by Tier 1 goldies like RMS and Rox caught in a credit squeeze increases the odds Rox will be taken over. Facing a high debt hurdle, the Board may even follow the Bardoc path and put the project up for sale. Bardoc was sold for $157m at a time. When the price of gold was well under $2,000 oz/Au. Today’s POG is $3,782 and if we do have a recession is predicted to rise to well over $4,000.
RXL Price at posting:
14.5¢ Sentiment: Buy Disclosure: Held
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