Rox Resources offered $14.8M for Reward zinc project

THE BOURSE WHISPERER: Rox Resources (ASX: RXL) didn’t have to wait long to attract interest after the recent release of a Resource at the company’s Reward zinc-lead project in the Northern Territory.

The company has announced IMI Zinc Exploration (IZE), a wholly-owned subsidiary of IM Medical Limited (ASX: IMI), has offered to acquire Rox’s interest in the Reward project.

The offer comprises $2 million payable in cash and the issue of $12.8 million worth of shares in IZE’s parent company, IMI.

The deal is subject to Rox entering into an Exclusivity Agreement, which it has agreed to do, with the offer open for acceptance for an ‘Exclusivity Period’ until 17 August 2016.

Rox explained the Exclusivity Period allows it 30 days to complete due diligence on the $14.8 million offer, which is also conditional upon Rox’s option/joint venture partner, Teck Australia Pty Ltd, not exercising and waiving its pre-emptive right to acquire Rox’s interest, as well as additional conditions.

“This offer from IZE vindicates our view of the value of the Reward project (and Teena deposit), and the fact that it has gone unrecognised in our share price for so long,” Rox Resources managing director Ian Mulholland said in the company’s announcement to the Australian Securities Exchange.

“This is a significant outcome for the company which will not only allow our shareholders to retain an exposure to Reward, but will also facilitate a release of funds to Rox which will enable us to pursue other growth opportunities.

“We also believe that through this transaction Reward will be able to be more fairly valued in the market, and at the same time our future funding exposure for the project will be reduced.

“Rox will use the Exclusivity Period to complete its due diligence and determine the necessary statutory, shareholder and other approvals.”

The Reward project includes the Teena zinc-lead deposit where a maiden JORC (2012) Inferred Mineral Resource of 58 million tonnes grading 12.7 per cent zinc and lead (Zn+Pb) (11.1% zinc, 1.6% lead) for 7.4 million tonnes (16.3 billion pounds) of contained zinc and lead, at a six per cent Zn+Pb cut-off, was announced in June.

It is the largest high-grade (greater than 8% Zn+Pb) zinc-lead mineral resource announced in Australia for the last 20 years and ranks 7th all-time amongst zinc-lead deposits in Australia.

The Reward project also contains the Myrtle zinc-lead deposit with an Indicated and Inferred Mineral Resource of 44 million tonnes grading five per cent Zn+Pb (4.1% zinc, 1% lead) for 2.2 million tonnes (4.8 billion pounds) of contained zinc and lead at a three per cent Zn+Pb cut-off.