Historically, Rox Resources (ASX: RXL) has demonstrated its ability to acquire, develop, and monetise quality projects.
Rox Resources is currently sitting on a healthy war chest of approximately $12 million after selling the Reward zinc project in the Northern Territory to Teck Australia Pty Ltd.
Rox wasted very little time in showing its strategic intentions by landing a 100 per cent-acquisition of the Collurabbie nickel- gold-copper-PGE project in Western Australia.
The Collurabbie project tenements are situated due east of Rox’s other current operations – the Fisher East nickel sulphide and Mt Fisher gold projects.
The latest results from aircore drilling of strong nickel-copper-PGE anomalies at Collurabbie have again highlighted the project’s potential.
The drill program produced standout results, including:
24 metres at 0.38 per cent nickel, 0.17 per cent copper, 126ppb platinum, 235ppb palladium from 28m, including 8m at 0.5 per cent nickel, 0.29 per cent copper, 228ppb platinum and 317ppb palladium from 36m; and
32m at 0.6 per cent nickel, 0.36 per cent copper, 273ppb platinum, 405ppb palladium from 4m, including 20m at 0.7 per cent nickel, 0.4 per cent copper, 305ppb platinum, 464ppb palladium from 8m.
24m at 0.56 per cent nickel, 0.12 per cent copper, 178ppb platinum and 212 palladium from 16m, including 12m at 0.74 per cent nickel, 0.19 per cent copper, 309ppb platinum and 315ppb palladium from 20m; and
24m at 0.56 per cent nickel, 0.04 per cent copper, 78ppb platinum and 84ppb palladium from 16m, (hole did not reach target depth).
In addition, anomalous nickel results were received north of Ortus along the Beta Sill.
The results indicate lateritic enrichment above a potential large low-grade disseminated nickel sulphide mineralized body:
27m at 0.45 per cent nickel from 4m; and
20m at 0.39 per cent nickel from 4m.
An aircore drilling campaign was completed at Mt Fisher, where Rox has already identified mineral resources of more than 86,000 ounces of gold.
The latest drilling focused on the Dam, Damsel, Dirks and Shiva prospects, delivering results that provide excellent potential for further exploration to add to the current resources.
Rox believes the Dam-Damsel-Shiva area has similarities to the 3.6 million-ounce Bronzewing deposits to the southwest, and is using the knowledge base built up in the 1990s and 2000s regarding Bronzewing and the Yandal Belt in its exploration program design.
The Damsel area hosts a gold indicated mineral resource of 726,000 tonnes at 2.3 grams per tonne gold for approx. 55,000 contained ounces of gold.
The aircore drilling extended the anomaly surrounding this resource by 800m to the south, suggesting possible extension and increase to the existing mineral resource.
Highlights of the aircore drilling include:
4m at 6.1g/t gold from 48m;
4m at 2.75g/t gold from 32m;
8m at 2.4g/t gold from 20m; and
4m at 3.5g/t gold from 40m.
The Collurabbie acquisition set a precedent for the company that it is eager to repeat in the coming months.
Rox is on the lookout for the acquisition of suitable projects, which it hopes will deliver meaningful shareholder value and, just as importantly, allow the company to progress to near-term production.
No doubt such an acquisition is liable to take ‘flagship’ billing from the company’s current portfolio, however, Rox is determined to continue exploration and development activities at its nickel and gold assets.
“We are watching the nickel price closely and have been encouraged by its recent run,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.
“Having said that, we do believe nickel probably has another year or two before it reaches a price where we will see previously working operations reopen and deposits, particularly the class 1 sulphide deposits, become economic.
“All the signs are there – demand is increasing, and supply has gone down.”
Mulholland’s optimism received support from some powerful corners.
The World Bank Group, in its 2017 Commodity Markets Outlook, October said, “All metals prices increased in the third quarter, led by zinc and nickel, which jumped 14 percent on robust demand and reduced mine production (zinc) and solid stainless steel demand (nickel).
“The market is expected to remain in deficit in the near term.
“Over the longer-term, demand is seen increasing to meet growing needs for nickel in lithium-ion batteries for electric vehicles and storage.”
According to recent research note from McKinsey & Company – The future of nickel: A class act, the global nickel market is about to enter a two-nickel market, comprising two distinct commodity segments.
These are traditional ferronickel pig iron (NPI) players (Class 2) versus (Class 1) the rechargeable batteries for electric vehicles (EVs).
“The global nickel market has traditionally been driven by stainless steel production using both high-purity class 1 and lower-purity class 2 nickel products,” McKinsey & Company said.
“Significant expansion of low-cost class 2 nickel capacity over the past decade – in particular NPI – has caused nickel prices to fall from the highs of US$29,000 per metric tonne in 2011 to an average of just above US$10,000 per metric metre in 2017, resulting in the curtailment of higher-cost class 1 capacity.
“However, the growing adoption of EVs and the resulting demand for high-purity nickel is providing a much-needed reprieve for the industry as a shift towards nickel-rich battery chemistries accelerates.”
McKinsey suggested that with demand for EVs expected to hit 31 million units by 2025, demand for class 1 nickel could increase from its current 33,000 tonnes to 570,000 tonnes by 2025.
Other analysts suggest this could occur much earlier, perhaps 2020.
Rox may be ready for the nickel worm to turn, but it is not prepared to sit around and wait for it to happen.
Since declaring its project accumulation strategy last year, the company has undertaken a first-pass review of many opportunities, assessing them against its project acquisition criteria.
Three projects are currently the subject of more advanced assessment including due diligence, data review and suitability to deliver near-term production and revenue.
Rox has developed a stringent, well-structured investment and technical criteria which each project is being assessed against.
It has identified specific commodity targets which are currently displaying strong macro fundamentals, including increased pricing, but which show a lack of any new near-term production options to cater for the surging demand globally.
These commodities include, but are not restricted to zinc, which has recently seen prices hit a ten-year high, and copper, with prices recently at three-and-a-half year highs on supply fears due to a lack of near-term production projects and increasing demand from major economies such as China.
“We remain one of the ASX’s well-cashed-up junior explorers with $12 million at the end of December,” Mulholland said.
“Our exceptional portfolio of existing assets provides exposure to the nickel and gold markets and we will continue to monitor market conditions, particularly with respect to where nickel goes in coming years.
“Importantly, our financial position gives us the firepower to aggressively pursue near-term growth opportunities and we are looking at numerous projects across a range of attractive commodities that we think can deliver significant shareholder value in the short term.”
Rox Resources Limited (ASX: RXL)
…The Short Story
Level 1, 34 Colin Street
West Perth WA 6005
Ph: +61 8 9226 0044
Stephen Dennis, Ian Mulholland, Brett Dickson