RXL 0.00% 3.7¢ rox resources limited

Positive posts on Rox, page-2

  1. 8,346 Posts.
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    I see the futures of Rox and Ramelius as intertwined.
    Of course Rox is just a tiny small cap company and Ramelius is a giant but nevertheless I think it's true.
    Have a look at the RMS share price chart and the price of gold in au.

    .https://hotcopper.com.au/data/attachments/2929/2929537-1e8047475c048349ebaf071cd0b23f5f.jpg https://hotcopper.com.au/data/attachments/2929/2929540-08b3c4c938067e7e530a30dfb80569b0.jpg

    During 2020 RMS had an AISC of $1164 and this year guidance is for an AISC of A$1,230-1,330 an ounce.
    If you extend the trend on the POG then the AISC margin gets thinner very quickly.
    All the broker reports on Ramelius have it as a buy but the share price is falling because of risk.
    Personally, I don't think that the POG will do badly this year but billion dollar companies do not take risks.
    This is why Ramelius's Penny Gold Project is so good with an AISC of just $660 oz au, about half the current AISC of Milky Way, Tampia and the other mines that Ramelius operates.
    RMS finds it hard to get the AISC down because the grades are relatively low, Mt Magnet 2.74g/t with 96.5% recovery Tampia low grade 1.7 g/t au. (A tangent: if you look over RMS grades you might reappraise the Q4 Rox drilling results - low grade yes but mineable and will add to the Grace JORC).
    The Ramelius MD Mark Zeptner has commented on RMS acquisition plans in various forums.
    He says they want a lower AISC than at present and they want size, preferably a million ounces.
    While the million oz au is desirable they did buy Penny with about 300 oz au high grade.
    The above is factual to the best of my knowledge (I'm sure I will be corrected if not).
    But the following is pure speculation, my opinion and certainly not investment advice.
    Alex and Ramelius execs are getting along just fine. Rox has the only fresh water aquifer at Youanmi and he shares it with RMS. All the water you see in the pits is toxic, which is why it has to be pumped into dams to evaporate rather than being pumped into the landscape.
    Rox shares a lot more than water with his mates at RMS and they are happy to let his staff use their airstrip and other facilities they will have at their Penny Mine.
    To repeat: this Is my opinion only and Alex did not tell me this: Ramelius have given Alex a JORC target on Grace and the plan was to wrap up a deal before the end of 2020 straight after the Grace JORC was to be announced. Alex went hell for leather drilling the daylights out of Youanmi granite to get to that target. There were a few good hits that will grow the low AISC JORC but overall the drilling failed to reach the target and the JORC date was pushed out once again to June (but perhaps earlier).
    To say Rox failed in Q4 2020 is wrong but this was a setback.
    In Q 1 2021 Rox is no longer drilling blind. They have a new exploration model informed by Q4 results, SAM and ppb au data.
    Then we have Link and the Junction target, a continuation of the Pollard Shaft (historical 260,000 oz @15 g/t).
    To sum up both RMS and RXL are under pressure. RMS is stuck with a declining AISC margin and Rox is trying very hard to get an attractive TO package together.
    So despite what I said before about Rox restarting the Younami mine in the next year of so I have now changed my mind?
    Yes! Rox will struggle to meet the capex requirements of mining, even Grace. As for underground such as the Deeps, the capex on the Penny Project is $35m and that's just the mine not the processing (at Mt Magnet). Another consideration for me was the very positive and altered relationship between RMS and Rox and I can't comment further.
    IMO Alex wants a TO and is working to facilitate it.
    Once again speculation, my opinion and certainly not investment advice.

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