The feasibility process at Youanmi starts with the...

The feasibility process at Youanmi starts with the Pre-feasibility Study (PFS) due in June this year and finishes with the Definitive Feasibility Study (DFS) which should be delivered in April/May 2024. The Final Investment Decision should be announced by June/ July next year and following finance mine construction should start early in Q4 2024. The mine should be commissioned and start production early in Q4 2025 but it could be earlier.

The DFS costs millions and unless Rox can offload a non-core asset a large new share issue to instos will be needed. This will increase the capital value of the company which is good for Rox because instos favour investment in high cap rather than low cap companies. But the dilution of the share registry means that even though the company value rises the share price does not necessarily reflect the gain (because there are more shares).

But the feasibility process de-risks the project and that is a positive for the share price. Also, growing the mineral resource increases the Life Of Mine (LOM) and share price and Rox will be growing the current MRE from an already impressive 1Moz at 6.1 g/t Au.

At Bardoc, Rob Ryan increased the PFS resource from 789K to a Reserve of 1m ozs in the DFS.

In my opinion, under cover of announcing some very optimistic estimates of expected new gold resources, Rox has sensibly retreated from adventurous regional and near mine targets with the exception of a new lode at Currans. All the near mine IP targets were dusters as was Linda Gossan. After the disappointment of Paddy’s Lode were the IP targets “look over here”?

Rox has now turned to much safer drilling by expanding indicated resources they already have, such as at Link and that is very likely to be successful. We will have to wait to see how much the MRE can be grown but I would expect indications by way of progress reports based on drill results from now on.

Rox is now in safe hands and on track to deliver a free cash flow of around $150m PA but Youanmi will not be in production until 2025. Not for Day Traders but worth considering that the market valuation is just $66.5m.