World-class Resource wakes slumbering sector

THE INSIDE STORY: The Australian investment community finally took note of how impressive the Teena zinc deposit of Rox Resources (ASX: RXL) actually is.

All it took to shake everybody up was the release of a world-class Mineral Resource for Teena, placing it on par with the world’s largest zinc deposits.

Utilising a six per cent zinc-lead (Zn+Pb) cut-off, the JORC (2012) Inferred Mineral Resource is:

58 million tonnes grading 12.7 per cent Zn+Pb (11.1 per cent zinc, 1.6 per cent lead) for 7.4 million tonnes of contained zinc and lead metal (6.5Mt Zn and 0.9Mt Pb).

The Teena zinc deposit, located eight kilometres due west of the McArthur River zinc mine, is part of the Reward zinc-lead project in the Northern Territory, a Joint Venture between Rox and Teck Australia, (Rox 49%: Teck 51%), a subsidiary of Canadian major Teck Resources.

Teck is earning up to a 70 per cent stake by spending $15 million, having already spent $13.8 million.

Announcing the Inferred Resource, Rox declared the Teena deposit to represent the largest and highest grade zinc-lead mineral resource discovered in Australia for over 20 years.

“On a global scale, the estimated tonnage and grade of Teena is comparable to other giant zinc-lead Resources,” Rox Resources managing director Ian Mulholland told the Resources Roadhouse.

“Teena has zinc grades as high as currently operating mines at McArthur River, Mt Isa and the grades previously mined at Century.”

To provide some idea of scale – Teena contains a total of 16.3 billion pounds of zinc and lead metal (14.2 billion pounds zinc, 2.1 billion pounds lead), which in terms of contained metal exceeds the endowments of both the Cannington (South 32) or the Dugald River (MMG Limited) deposits.

Rox’s current 49 per cent interest will ultimately drop to a 30 per cent interest after Teck completes its earn-in.

This is still a considerable interest for a junior exploration company in such a project, and compares favourably to other companies with minority interests in substantial projects, such as Independence Group’s 30 per cent of Tropicana, Talisman’s 30 per cent of Monty, and Creasy Group’s original 30 per cent (now sold) of Nova.

“There are two lenses of zinc-lead mineralisation at Teena, which occurs as two sub-parallel lodes, termed the Lower Lode and the Upper Lode,” Mulholland explained.

“The upper lens has a Resource of 45 million tonnes at 13.7 per cent zinc and lead (12 per cent zinc, 1.8 per cent lead), while the lower lens is a little bit thinner and a little bit lower grade with a Resource of 14 million tonnes at 9.4 per cent zinc and lead (8.2 per cent zinc, 1.2 per cent lead).”

Drilling at Teena has defined a large stratiform mineralised system over one kilometre in length and Rox is confident the Mineral Resource will grow by further drilling, especially along the margins of the deposit.

Drilling has been constantly encouraging, returning results including:

38 metres at 16.9 per cent zinc and lead Zn+Pb;
26.4m at 13.3 per cent Zn+Pb, including 16.2m at 17.2 per cent Zn+Pb; and
20.1m at 15 per cent Zn+Pb, including 12.5m at 19.5 per cent Zn+Pb.

“The drilling has always returned high grades over good thicknesses, which have been defined over 1.3 kilometres – probably up to 1.5 kilometres,” Mulholland noted.

“It is worth noting that the drill spacing is still fairly wide, which is why this is only an Inferred Resource, but there is remarkable continuity between the drill holes – every drill hole virtually looks the same.

“The other remarkable aspect about the project is the zinc to lead ratio, which is around 6.5:1 , which we think will be favourable for metallurgy.

“We’re only at a preliminary stage with metallurgy but we think that is going to be quite good.”

Mulholland made a special effort to dispel a popular misconception about the depth of the Teena deposit, indicating it to be sitting between 400m to 1000m depth.

“It’s not deep when you compare it to other deposits and we know of no impairments to mining the ore body,” Mulholland said.

“Most of the mineralisation sits between 600 metres to 900 metres below surface – relatively speaking that is not very deep.

“We are really in elephant country – the Carpentaria zinc province, where over 20 per cent of the world’s zinc reserves are contained and mined at depths of well over one kilometre.

“Teena currently sits at number seven on the all-time Australian zinc deposit size list.”

The recent excitement being generated from Rox’s West Perth offices has not been contained to the goings on at the Teena deposit.

The company has also been busy elsewhere within its project portfolio, most recently at its Mt Fisher gold project, located in the north-eastern Goldfields of Western Australia approximately 230 kilometres north of the town of Leonora.

Rox has struck another shrewd JV agreement at Mt Fisher, this time with emerging WA gold production heavyweight, Doray Minerals (ASX: DRM).

Under the terms of the farm-in agreement, Doray is to sole fund an initial $5 million expenditure to earn a 51 per cent interest and a total of $10 million to ultimately earn a 75 per cent interest.

“There is a one million dollar minimum expenditure in the first year before they can withdraw,” Mulholland said.

“Then an additional $4 million over two years to earn 51 per cent and then another $5 million over another two years to move to 75 per cent.

“Rox is free-carried to the completion of a Pre-Feasibility Study.”

Once it was known Rox was looking for a JV partner for Mt Fisher there was a lot of interested parties knocking on its door.

“Being a small exploration company with limited resources we were very pleased to attract a Joint Venture partner such as Doray Minerals, a company with the credentials to accelerate the search for a significant gold deposit in the area,” Mulholland said.

The Mt Fisher project comprises a number of exploration tenements covering approximately 480 square kilometres, within the underexplored Mt Fisher greenstone belt.

This belt is located 40km east of the prolific Yandal greenstone belt, host of significant gold deposits such as Jundee, Bronzewing and Mt McClure.

When compared to neighbouring greenstone belts the Mt Fisher belt, with just on half a million ounces of gold endowment, can look a touch underdone – the Norseman-Wiluna belt has over 10 million ounces of endowment, the Yandal belt with over 17 million ounces of endowment.

“We see there is very good potential to find gold there, and at least define a few million ounces,” Mulholland said confidently.

“We have been conducting some extremely focused exploration here and have grown Resources to just under 100,000 ounces.

“The potential of this project really needs to be reassessed in light of the higher gold price.”

Mulholland’s confidence seems justified, given the price of gold is up 15 per cent since the company’s last project evaluation, which he believes makes the Mt Fisher gold project look even stronger.

“The gold-in-regolith anomaly is of significant size and contains a large amount of gold,” he said.

“We consider this indicates a deeper source of gold, and from the amount of gold in the weathered regolith that gold source must be sizeable.”

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

Drake Private Investments   3.4%
Rox Directors        2.1%