Rox is considering the production of pure gold rather than gold concentrate and this is a significant step.
Rox’s underground indicated MRE 1.1m ozs @ 6.1 g/t. is in the transition zone between the oxide free milling gold and refractory ore. This transition zone mildly refractory ore contains sulphur and arsenic impurities. The assumed base price of gold will rise by about $600 oz in the PFS compared with the Scoping Study and this increase vastly outweighs the extra cost of producing pure gold. Albion processing rather than POX has been favoured but if Rox can follow the example of Emerald Resources and process refractory ore cheaply just by fine grinding and floatation, the production of pure gold would have strong financial benefits. The PFS will provide the comparative financial metrics.
But even if the free cash flow is marginally higher with the concentrate model Rox will choose to produce pure gold.
Rox have clearly demonstrated that the concentrate model has excellent metrics and there is a strong demand. But refractory resources have a stigma highlighted by the production of concentrate.
It’s not just retail investors as seen on this thread. If instos have a choice between a company that produces concentrate and one that produces pure gold with similar metrics they will choose the pure gold producer. This has been a persistent barrier to insto investment in Rox for 4 years.
Is it justified? Not really but there is no spot price for gold concentrate, sales are by negotiation so selling concentrate is more complex with less certainty. The market likes the certainly of the spot price reference.
Almost all concentrate goes to China where it is processed. China does not buy heavily refractory concentrate which is not a problem with the low arsenic Youanmi concentrate. In fact, it’s an advantage because Rox’s concentrate can be used to dilute the arsenic content of other concentrates to make them acceptable under Chinese environmental laws. Nevertheless, China is strengthening its environmental green credentials and there is a very small risk that eventually more laws will hamper the concentrate trade.
It's very likely imo that in June Rox will announce that they will produce pure gold in the order of 100,000+ ozs per year.
