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Company Overview

Rox Resources Limited (“RXL” or the “Company”) is a mineral exploration company focused on the redevelopment of its Youanmi Gold Project. The Youanmi Gold Project is located 480km northeast of Perth, Western. Australia. Rox is the 100% owner and operator of the historic Youanmi Gold Project near Mt Magnet and owns the Mt Fisher - Mt Eureka Project approximately 140 kilometres southeast of Wiluna with 100% ownership of certain tenure with the remaining tenure held via a joint venture (Rox 51%, earning into 75%). The project covers 697km² and > 60km of strike of the prospective Youanmi Shear Zone which is highly fertile in gold endowment. The Group has 100% of all mineral rights at the Youanmi Gold mine including nearby extensions and 90% to 100% of gold rights in the regional tenure. The company consolidated its position by acquiring remaining gold rights in regional tenure from Venus in July 2023. In Oct’22, the Company released a Scoping Study for the Youanmi Gold Project, with robust financials. The project is expected to produce an average annual gold production of approximately 71 koz per annum, with an average gold head grade of 5.0g/t Au for a total gold production target of approximately 569 koz over the 8-year Life of Mine ("LOM") and LOM All-In Sustaining Cost ("AISC") of approximately $1,538/oz (payable Au). The project is expected to generate cumulative EBITDA of approximately $577m over the life of the Project and a pre-tax and unleveraged payback of approximately 3.0 years, reflecting the high grade and low capital intensity of the Youanmi Gold Project. The company is undergoing a pre-feasibility study on its 100%-owned Youanmi Gold Project. In Jan 2024, the company announced an updated Mineral Resource Estimate (MRE) for the Youanmi Gold Project confirming Youanmi as one of the highest-grade emerging gold projects in Australia, with a total Resource of 2.3Moz at 4.4 g/t Au.

Investment Rationale

The updated MRE confirmed Youanmi as one of the highest-grade emerging gold projects in Australia, with a total resource of 2.3Moz at 4.4g/t Au.

In Jan’2024, the company announced an updated Mineral Resource Estimate (MRE) for the Youanmi Gold Project, which confirmed Youanmi as one of the highest-grade emerging gold projects in Australia with a total Resource of 2.3Moz at 4.4 g/t Au. The updated MRE delivered a 20% increase in the overall Youanmi Indicated Resource to 1.56Moz at 4.5 g/t Au or 68% of the updated total MRE and a 359Koz or 48% increase in the Youanmi Underground Indicated Resource to 1.10Moz at 6.1 g/t Au, providing strong platform for potential improvements in the upcoming PFS economic metrics. The upgrade of the Youanmi Underground Indicated Resource was driven by the successful in-fill drilling campaign in 2023, providing a strong platform for the upcoming Pre-Feasibility Study and maiden Ore Reserve. The in-fill drilling focused on high-priority areas such as Link to convert Inferred Resources to the higher confidence Indicated classification for inclusion in the upcoming Pre-Feasibility Study (“PFS”). Since Rox acquired the Youanmi Gold Project in April 2019, Indicated Resources have grown by 1.10Moz or 228%, with underground Indicated Resources increasing by 0.89Moz or 425%. The company also generated substantial near-mine Exploration Targets, providing the opportunity for future resource growth.

The recently released positive Pre-Feasibility Study confirmed Youanmi as a long-life, high-grade 100 kozpa gold project.

In July 2024, the Company released a positive Pre-Feasibility Study(PFS) for its 100% owned Youanmi Gold Project located 480km northeast of Perth, Western Australia. The study confirmed Youanmi as a financially attractive standalone high-grade, high-margin Australian gold project, with an initial ~7.7-year life at a low AISC of A$1,676/oz. The project is expected to produce ~786koz of gold doré over the life-of-mine (LOM), averaging 103kozpa over an initial 7.7-year period. The study delivered compelling financial metrics, with an IRR (Post-tax) of 33%, and a payback period of 3.3 years (post-tax) using a conservative gold price assumption of A$3,100/oz (approx. 11% discount to spot). The study-

Confirmed a financially attractive standalone high-grade, high-margin project with an initial circa 7.7-year LOM, at a low AISC of $1,676/oz;
Maiden high-grade Ore Reserve declared of 546koz at 4.4g/t Au;
Production target of 786koz of gold doré produced over the life-of-mine, averaging 103kozpa
Compelling financial metrics using a conservative gold price assumption of A$3,100/oz:
Free cash flow (pre-tax) of $855m and $597m (post-tax)
NPV₈ (pre-tax) of $486m and $322m (post-tax)
IRR (pre-tax) of 42% and 33% (post-tax)
AISC of $1,676/oz
Payback period (pre-tax) of 2.9 years and 3.3 years (post-tax)
Pre-production capital of $245m
NPV₈ / Pre-Production Capital 2.0 times (pre-tax)
Free LOM cash-flow (pre-tax) of $1.2 billion and $810m (post-tax) at spot gold prices of A$3,500/oz (July 2024 average up until 22 July 2024);
Significant potential upside remains to increase the production target with resource growth and substantial near-mine exploration targets; and
The board approved the progression of the Project to the Definitive Feasibility Study stage.

Significant potential exists to grow Resources and Reserves and the Production Target.

There is a significant potential to aim to grow Resources and Reserves to increase Production Targets and mine life in future studies. The PFS outlined a compelling development case, with the board's approval to progress the project to the Definitive Feasibility Study (DFS) stage. During the June 2024Q, the company also announced high gold recoveries from multiple flowsheets based on recent metallurgical test work programs from the Youanmi Gold Project. During the Sep 2024Q, the Company commenced a 7,000-metre Reverse Circulation (RC) drill program and a 4,000-metre Diamond Drilling (DD) program – targeting completion in Oct 2024. The resource drilling is focused on converting selected Inferred stopes in the current Mineral Resource of 2.3Moz to the higher confidence Indicated classification at Pollard, United North, and Youanmi Main. The drilling will also provide valuable data for metallurgical testing for the Definitive Feasibility Study. Near-mine exploration drilling will focus on the Youanmi South prospect area, predominantly on drilling Paddy’s Lode down-dip of the high-grade intercepts reported in 2023. Youanmi South has the potential to grow the Resource and the 103Kozpa Production Target outlined in the Pre-Feasibility Study. Subsequently, to the quarter end, the company completed the first phase of its near-mine exploration program, with five RC-diamond holes drilled at Paddy’s Lodes delivering significant gold (Au) intersections located down-dip and along strike from previous drilling in 2023.

During the Sep 2024Q, the company commenced several Definitive Feasibility Study ("DFS") workstreams, including the development of a detailed project schedule identifying critical path items, DFS Metallurgical test work, including comminution, flotation, and Albion-related test work, Preparation of core samples for metallurgical test work, geotechnical test work, and flotation optimization testwork. RXL is targeting completion of the DFS in 2025.

ACE’s Recommendation

Rox Resources is delivering on its dual strategy of developing the Project while continuing to add quality ounces through strategic exploration and resource definition drilling. In Jan’2024, the company announced an updated Mineral Resource Estimate (MRE) for the Youanmi Gold Project, which confirmed Youanmi as one of the highest-grade emerging gold projects in Australia with a total Resource of 2.3Moz at 4.4 g/t Au. The updated MRE delivered a 20% increase in the overall Youanmi Indicated Resource to 1.56Moz at 4.5 g/t Au or 68% of the updated total MRE and a 359Koz or 48% increase in the Youanmi Underground Indicated Resource to 1.10Moz at 6.1 g/t Au. In July 2024, the Company released a positive Pre-Feasibility Study (PFS) for its 100% owned Youanmi Gold Project. The recently released PFS has delivered a robust, high-grade development base case for a 100kpa operation over an initial 7.7-year mine life, based on recent geological and metallurgical studies that benefited immensely from historic production data and existing infrastructure. The PFS confirmed the potential to develop a financially attractive standalone high-grade, high-margin Australian gold project with an initial ~7.7-year life, at a low AISC of A$1,676/oz. The study delivered compelling financial metrics, with an IRR (Post-tax) of 33%, and a payback period of 3.3 years (post-tax) using a conservative gold price assumption of A$3,100/oz (approx. 11% discount to spot). During the Sep2024Q, the company commenced several Definitive Feasibility Study (“DFS”) workstreams and is targeting completion of the DFS in 2025. We believe that the DFS on its 100% owned Youanmi Gold project in 2025 is a key near-term catalyst for growth. The stock closed the day at A$ 0.160/share and presents an investment case in our view. So, we would like to recommend a SPECULATIVE BUY rating on the stock.

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