Focus Is On Youanmi Gold Development
Rox Resources Ltd (ASX:RXL) has identified two potential options for its planned strategic divestment of its Western Australian nickel assets.
Following a review conducted over recent months, and with increasingly positive investor sentiment surrounding the nickel sector, the company is progressing, in parallel, a possible third-party sale of its nickel assets, and alternatively, a spin out of these assets to its shareholders in a new corporate ASX-listed vehicle. The due diligence and preparatory documentation for the potential spin-out are already significantly advanced.
Managing Director, Alex Passmore, said that over the coming months the company intends to finalise the preferred path forward, being guided by whichever option best maximises value for shareholders, with the aim of updating the market during the second quarter of calendar year 2021.
“With our primary focus on the development of Youanmi gold project, our nickel assets are ascribed little value by the market.
“There is strong market interest in the nickel sector, which presents a great opportunity to attain strong value recognition for the company’s nickel assets, that we believe are currently undervalued to Rox shareholders.
“We are advanced in the process of determining the scenario that will provide the best outcome for Rox shareholders.
The company owns the advanced Fisher East nickel deposits, is earning an interest in an exploration joint venture to the north of these deposits (Cullen JV), and also holds the Collurabbie nickel project located approximately 80km to the east of Fisher East.
Fisher East is the flagship asset in the package with a 78kt contained nickel metal resource and a scoping study having been last updated in 2018.
The company completed an updated Scoping Study on the Fisher East Nickel project in late 2018. This high-level study considered two primary development scenarios, first, building a stand-alone concentrator, and second, toll milling at a nearby operation. Under either scenario, the study demonstrated that the project had strong economic and technical credentials at a nickel price of US$7.50/lb (current price is ≈US$8.50/lb).
In addition, there would be significant upside to project economics with an increased resource base. Capital costs were relatively low, with competitive cash operating costs.
Mr Passmore said Rox believes its nickel assets are significantly undervalued within the current company structure, and accordingly is pursuing a strategy to unlock the value of its nickel portfolio.
