Rox has produced a MRE of 1.1m oz Au @ 6.1g/t.That is an...

Rox has produced a MRE of 1.1m oz Au @ 6.1g/t.

That is an outstanding resource that is likely to lead to a very positive PFS in June.

An unknown at this stage is how much of that Indicated resource can be mined profitably ie the size of the Reserve. No guarantees, but if Rox can release a large Reserve with the PFS or FS then their progress to a mining restart will be substantially de-risked.

With the price of gold breaking through AU$3,100 oz Au almost all if not the entire MRE will become the Reserve imo.

Despite the impressive MRE and high POG the share price is now 20% lower than the 20 cps that insiders and Hawke’s Point bought into.

It seems that the market has little confidence in junior miners coming into production and Rox is not alone in that.

Below is the Capricorn Metals chart, another gold miner that Hawkes Point invested in. The market gave almost no credit to the strong PFS and only reacted positively when the funding was announced to start building the mine. Nevertheless, the investors who held on ended up making a massive gain on their investment (see the Market Cap). Worth noting that Hawke’s Point helped to block a low ball TO bid.

Rox is likely to produce a positive PFS in June and after that must do a cap raise to pay from the FS and DFS and for drilling to grow the MRE. They may choose to raise around $5m in June and then raise again after the FS or they may seek to raise around $10 m in June. Given the terrible share price a raise to instos in June is likely to see a substantial dilution of the share registry.

That’s a negative for share holders but there are clear benefits in strengthening the insto holdings.

The most important insto investor is Hawke’s Point and Rox would be keen to have them increase their share of the company, even at the cost of dilution.

In March 2021 Hawkes Point invested $11m in Rox at 35 cps

In March 2022 they invested again at 40cp and recently invested once more at 20 cps

Hawke’s Point sold their Cannon IPO shares at a profit but overall they have lost millions (on paper) on their Rox investments.

But a large, new placement of shares to Hawke’s Point has many advantages to Rox as it proceeds along the feasibility path.

The main one is to protect against a hostile TO (the MC is only $55.4m for a company that in time should be delivering a free cash flow of $100m+ PA).

A strong Hawke’s Point holding also makes them more likely to provide further funding and access to capital markets for the substantial Capex required for restarting the Youanmi mine.