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14.5¢ rox resources limited

NPV needs to be lower as RXL owns only 70% of the projectPayback...

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Corgi

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19/10/22

13:50

Post #: 64278633
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Originally posted by m0ngy: ↑

This is a very conservative Scoping Study.
Only 20% of Youanmi Mineral Resource is included in the mining production target
Only 27% of the high grade UG resource is included The last gold mined in the main pit was at 14 g/t with the gold channel widening. There is a lot more high grade gold at around 7g/t.
79% of the study resource is classified as Indicated and 21% as Inferred in the first three years. That is a high confidence ratio of indicated to inferred gold,
The metrics are good but If Rox has used more inferred ozs the NPV would have been even better. But Rox chose to present a highly credible study.
This study covers 8 years but the starter mine will only operate in this form for a few years before there is a step change to much higher production and cash flow. The early cash flow will repay Capex and be used to fund resource conversion to indicated and measured ozs.
This study provides confidence to instos that the Capex can be repaid in 3 years.
Note that partner Venus must pay its 1/3 of the Capex on a decision to mine.
The price of gold used is $2,450 oz au when it is currently over AU 2,600.
Rox has conservatively used a POG which is lower than the average gold spot price in the last 12 months.
The Project is forecast to generate a healthy unleveraged and pre-tax NPV5% of approximately $303m and an unleveraged and pre-tax IRR of approximately 45%.
Re the discount rate of 5%. DEG and Bellview used 5% and it's not a big mover in the metrics 1% = $15m
The POG is much more important than the discount rate.
In summary, Rox has presented a very detailed Scoping Study that is more like a FS.
This study is for a starter mine with low Capex and high confidence metrics.
Rox has a market valuation today of less than $39m.
IMO there that is a mismatch with the metrics presented today.

My opinion DYOR

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NPV needs to be lower as RXL owns only 70% of the project
Payback period of 3 years is too long. Needs to be no longer then 18 months. Risky for financiers
AISC reported is ok. But cannot be trusted when miners are experienced massive increases to AISC Qtr on Qtr.
Big Cap Raise coming to fund drilling for feasibility. Expect dilution of 20-25%. Should expect a discount with options attached.
Overall, not a negative SS, but no a re-rate catalyst either
SP won't move until POG can be sustained above $2800 which is where it needs to be NOW.
RXL Price at posting: 22.0¢ Sentiment: Sell Disclosure: Not Held
10 Upvote

2 Great analysis

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