THE INSIDE STORY: Rox Resources (ASX: RXL) was like a kid anticipating Christmas as it waited to receive a $20.6 million cash and receivables package for the sale of the company’s Reward zinc project in the Northern Territory.
Rox Resources signed the definitive Sale and Purchase Agreement with Teck Australia Pty Ltd in January, divesting its interest in the Reward project to Teck.
Rox completed the transaction in mid-February and is eager to get out on the ground as fast as it can to start up exploration on the rest of the company’s portfolio of prospective nickel and gold projects.
“Now we have that money we will be flying,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.
“The market is expecting us to get on with business and that is exactly what we intend to do.
“The sale of our interest in the Reward zinc project has been the biggest, and most important, transaction in the company’s history.
“It has clearly demonstrated to the market that we have a team that is capable of acquiring, developing, and monetising exploration projects to create value for our shareholders.
“The deal with Teck means that we are now fully-funded with a steady revenue stream for the foreseeable future and we are keen to make the most of the opportunity we have been given.”
Rox is eager to continue to advance its 100 per cent-owned Fisher East nickel project in Western Australia.
Mineral resources have been defined at Fisher East across the Camelwood, Cannonball and Musket deposits of 4.2 million tonnes at 1.9 percent nickel containing 78,000 tonnes of contained nickel.
The company has a program of RC drilling planned for the Horatio, Mt Tate, Cutlass, and Sabre North prospects.
Sabre is emerging as the ‘next big thing’ at Fisher East and Rox is also planning a round of diamond drilling to progress it towards the definition of a maiden resource.
To date, Sabre has only been subject to relatively shallow RC drilling, with a best intersection so far of 10 metres at 1.9 per cent nickel.
Most of the known EM conductor at Sabre has not been tested by deeper drilling.
“We already have targets identified at Fisher East but we have been waiting for the money to come in from Teck so we can hit that ground with a more extensive drilling program,” Mulholland said.
“We intend drilling out a Resource at Sabre and other prospects along the belt – Horatio and Mt Tate – where we have hit fresh sulphides in aircore drilling.
“The chances of doubling the Resource at Fisher East are very strong so instead of the current 78,000 tonnes we will be targeting around 150,000 tonnes of nickel.”
Rox has a total of $191,200 of Western Australia Government Exploration Incentive Scheme (EIS) funding available for drilling at Fisher East.
It was recently awarded a grant of $119,200 for deep drilling at the Camelwood prospect to go with a previously approved $72,000 EIS grant for drilling at the Sabre prospect.
Rox’s 100 per cent-acquisition of the Collurabbie nickel- gold-copper-PGE project in Western Australia is almost complete with Satisfaction of the Conditions Precedent for the acquisition to be finalised.
In anticipation, the company has an aircore drilling program planned.
The Collurabbie project tenements are situated just 70km due east of Rox’s Fisher East nickel sulphide and Mt Fisher gold projects, and there are clearly development synergies for both projects.
The Collurabbie project hosts the Olympia nickel sulphide deposit, where historical drilling returned results, including 5.8m at 3 per cent nickel, 2 per cent copper and 5.3 grams per tonne PGE.
Beside Olympia, Collurabbie hosts a number of strong prospects, such as Agora, Leros, Paros and Rhodes (East and West) where indications of mineralisation were identified by previous exploration, but never really received any substantial follow-up work.
“Collurabbie has been an ignored project for too many years,” Mulholland said.
“The project’s name is recognised by the industry, having had a fleeting moment of fame in 2004 when the Olympia deposit was discovered.
“Then when BHP Billiton took over WMC it all seemed to go to sleep and the project was put on hold and never looked at again with the same intensity.”
The historic work at Olympia identified it as a high-grade deposit, however due to the work being completed in 2004 it now needs to be brought up to 2012 JORC-compliancy.
Rox realises it has a way to go to calculate those Resources, but it does anticipate cataloguing an exploration target of around 10,000 to 15,000 tonnes of nickel at 2 to 2.4 nickel equivalent.
From what the company has seen to date it considers there to be high levels of copper and PGEs at Collurabbie and of a mineral enjoying a recent renaissance – cobalt.
“There is a whole belt at Collurabbie that hasn’t had anywhere near enough work carried out,” Mulholland said.
“Despite that, previous explorers did manage to identify some great targets, but the follow-up just hasn’t been there.”
The previous Collurabbie project drilling also demonstrated its potential to host gold mineralisation with several intercepts from the Naxos project showing positive signs, including:
2m at 5.2g/t gold from 30m
2m at 2.4g/t gold from 60m; and
2m at 2.47g/t gold from 70m.
Gold exploration carried out in the 1990’s focused on the northern part of the tenements, however there has been no further work since 2000.
Gold is the main commodity of the 100 per cent-owned 973,000 tonnes at 2.75g/t gold Mt Fisher gold project in Western Australia, which is now subject of a $10 million earn-in Joint Venture with Doray Minerals (ASX: DRM).
A heritage survey was completed covering the area of an aircore drilling program that Doray plans to commence during the first quarter of 2017.
With the Reward project sale more or less sewn up, Rox is now looking for buyers for its 51 per cent (Earning 70%) of the Bonya copper project in the Northern Territory.
“We are conducting a sale process at the moment, and there has been strong interest,” Mulholland explained.
“The Reward deal means that we will have a very healthy war chest and we will certainly be out there looking for new opportunities.
“Our business model is pretty simple - we ‘Acquire, Develop, Grow and Monetise’ Australian mineral exploration projects.
“The Reward project shows how this strategy works and demonstrates our ability to deliver results and create value for our shareholders.”
RXL Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
(20min delay)
