Yes smartdude, Chris Hunt, CFO at Rox, would certainly be able to come up with a mine financing structure which involves giving away some gold/revenue rather than issuing shares.
But he won’t for 2 reasons:
1 Rox is going to have to raise pre -production costs before too long and they will be a lot bigger than the $99m in the 2022 Scoping Study. The PFS will have a bigger mill and mining being entirely underground adds to infrastructure cost + inflation driven costs and after consolidation with Venus Rox pay it all.
But Rox has a market valuation of only $61m and they will need to raise around $130m?
That is not an attractive scenario, a lot of instos don’t even consider financing a company under $200m.
Rox needs to increase its market valuation and issuing shares does exactly that (assuming the SP remains the same).
By the time Rox gets into production the shares on issue will have increased by up to 50% and so the market valuation will have more than doubled.
This is necessary dilution. Look at Ora Banda Mining (another Hawke’s Point investment) with around 2B SOI and a market valuation of $461m.
2 Rox wants to encourage more insto investment and reward instos, especially Hawke’s Point, and their own management. That means issuing new shares as cheaply as possible to prepare for the pointy end of getting into production such as the FID when huge profits will be made.
At this stage I would expect Rox to be relaxed about the low share price. Not even a soaring price of gold has moved the needle (worth looking at the course of sales these days). The next CR is likely to be a large share issue to instos after the PFS. For the next few months the SP is likely to stay pretty much where it is right now
My Opinion DYOR
(20min delay)