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Are investors ready for a Rox Resources (ASX:RXL) redemption arc?
Source: Rox Resources
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  • It's going to take a lot more than a global pandemic, explorations setbacks and unfavourable investor sentiment to make a dent in Rox Resource's (RXL) unique value proposition
  • Despite some COVID-19 induced misfortunes earlier this year and a drop-off in its share price, Rox Resources has hunkered down to undertake a swathe of activities at its four gold and nickel projects in Western Australia
  • Strong results continue to pour in from its Youanmi Gold Project in Western Australia, which yielded stellar results of 34.79g/t gold and 140g/t gold last year
  • With a prolific portfolio and experienced board at the helm, could Rox Resources be one of the most undervalued multi-commodity plays on the ASX?

It's going to take a lot more than a global pandemic, explorations setbacks and unfavourable investor sentiment to make a dent in Rox Resource's (RXL) unique value proposition.

Less than a year ago, Rox Resources sat as one of the top up-and-coming undervalued gold plays on the ASX, but like all best-laid business plans, there are some external factors that even the most well-equipped company can't prepare for.

Throw in the unpredictability and stop-start nature of the mining exploration process and a myriad of eager investors waiting for on the dot updates, and it becomes even trickier, a sentiment Rox Resources is all too familiar with.

But like any story worth remembering, RXL's journey looks less like a plateaued trajectory but rather, one of redemption.

A rocky 2020

As a multi-commodity nickel and gold producer — a combination not usually seen among ASX-listers —Rox provides more than just a talking point in its offering, holding prolific assets in two key commodity markets.

The board was set, and investors seemed to recognise its value proposition too.

Rox released stellar results at the Grace prospect of its Youanmi project in June 2020, which included historical findings like 34.79g/t gold and 140g/t gold.

The news was enough for the company's share price to reach unprecedented highs, rallying for roughly two weeks and hitting a top of 8.7 cents, having hovered consistently around the 2 to 3 cent mark in the months prior.

The newfound high, however, was prematurely cut short.

As the invariable impacts of COVID-19 began to take a logistical toll on the Australian mining operations shortage in labour availability at gold assay laboratories resulted in turnaround times extending beyond two months, thus making it harder for those in the sector to deliver on promises made to investors before the unforeseeable set in.

The closing quarter of 2020 turned out to be less favourable towards the explorer, with negative investor sentiment shrouding significant discoveries made by the Rox just months before, as an underwhelming drilling program and delays in producing assays from drills took over as undesirable highlights.

So what has Rox been up to since then? And does a temporary wobble during a global pandemic undo the significant progress Rox made until that point?

Rocked but not rattled

Despite the volatile period, Rox has kickstarted 2021 by continuing to assert itself as an undervalued gold play as it gears up to make the crucial transition from explorer to miner.

With its value mostly made on its basis as a gold company, Rox estimates it trades around half that of the average gold company on the ASX, and when valued with its nickel assets, it comes in around a third of the average price.

With a development potential likely to be realised in the coming 24 months, it raises questions as to what investors would stand to gain in entering a company in its early, but promising stages.

In terms of projects, Rox has continued to push forward at the same tenements that delivered those historic results to investors almost eight months ago, guided by a driven, directed and qualified team.

The nickel and gold producer has four projects at some of Australia’s highest-grade gold deposits including gold prospects Youanmi and Mt Fisher, Fisher East Nickel and Collurabbie Nickel - Gold.

Youanmi Gold

Rox has been undertaking a significant exploration programme at its 70 per cent owned Youanmi project in Western Australia, the source of its historical findings that pushed its share price up last year.

The project was originally shelved in 1994, as gold prices sat around $400 dollars an ounce, leaving Rox the opportunity to enter a commodity that has since increased by almost 500 per cent to $1700 an ounce nearly 27 years on.

The explorer kept busy over the December 2020 quarter, completing 22 reverse circulation and 236 aircore drills for a total of 13,011 metres after identifying two new prospects within the granite corridor at the prospect.

Strong results continue to pour in from Youanmi, with notable findings from Link including 6.54g/t gold and 11.81g/t gold, with 9.6g/t gold from Grace north.

The prospect's current mineral resource estimate sits at 1.19 million ounces gold which is tipped to grow in 2021 once results from recent drills are factored in.

In terms of finances, Rox is sitting with roughly $5.2 million in cash and equivalents after heavy spending across its projects over the period.

Despite the tumultuous year, it seems it will take a lot more than a handful of delays and negative investor sentiment to dent Rox's same investment thesis, impressive gold results and undervalued status.

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