Rox announces maiden JORC resource


Transcription of Finance News Network Interview with Rox Resources Limited (ASX:RXL) Managing Director, Ian Mulholland.

Joining me today at the Symposium Resources Roadshow is Managing Director of Rox Resources (ASX:RXL), Ian Mulholland. Ian welcome to FNN. 

Ian Mulholland: Thanks very much.

Could you give us a run-down of Rox Resources, where you operate and what your focus is?

Ian Mulholland: Rox Resources is a junior Australian exploration company. Our focus is Australia and we are operating in Western Australia and the Northern Territory. We have the Mt Fisher gold project in Western Australia and in the Northern Territory we’ve got the Myrtle zinc project, and the Marqua phosphate project.

And what stake do you hold in each of the projects?

Ian Mulholland: Mt Fisher we hold the majority of the tenements 100 per cent ourselves. We have a small area that is an option agreement, where we have an option to purchase that and we would purchase that 100 per cent if we proceed with that. We’ve got another couple of years to go with that. The Myrtle project currently is 100 per cent owned by Rox, but it’s subject to an Earn-in and Joint Venture Agreement with Teck, who can earn up to 70 per cent. And our Marqua phosphate project is 100 per cent.

Now you just announced a maiden JORC Resource at the Mt Fisher gold and nickel project in Western Australia. When did you acquire the project and what has drilling uncovered?

Ian Mulholland: Okay, we acquired the project at the beginning of last year about March; we bought it from Avoca Resources. During the year we did about 8,500 metres of drilling and we identified about 86,000 ounces of resources, which we think is a pretty good achievement in 12 months. And more importantly, some of those resources are high enough grade that we should be able to mine them fairly soon, and create some cash flow for the company.

When do you plan to undertake further drilling and metallurgical test work?

Ian Mulholland: Well the next step is to run some what we call pit optimisations, to see how economic it is to actually mine it by open-cut. We’ll do some metallurgical test work along with that. And if that comes up positive, that will give us the targets to go back to drill and sort of basically confirm the resources ready for mining which we could, you know, potentially do by the end of 2012.

So Ian looking at future plans for the project, where do you expect ore treatment will occur?

Ian Mulholland: Well again, it depends on the economics of course, but if we’re going down a toll milling route, then we could potentially have that in production by the end of this year.

So what do you hope the next milestone will be for the Mt Fisher gold project?

Ian Mulholland: Well I think there’re two milestones potentially. One milestone is getting positive results from our economic analysis of the mining of the short-term projects. And then secondly, more drilling to extend the resource to increase the resource to the size of say, a quarter of a million ounces where we could start to consider the prospect of building our own treatment plant, rather than off-site toll milling which would be the near-term thing.

Now if we can turn to the Myrtle zinc lead project in the Northern Territory. What’s the size of the resource and what’s its significance on both an Australian and worldwide scale?

Ian Mulholland: Well at the moment the resource there is over 40 million tonnes at about five per cent lead and zinc. Now that’s significant because in the last 40 years, nothing of that size has been found in Australia, all of the previously known zinc deposits were before that. Our target is about 100 million tonnes that we’d like to see - at least 100 million tonnes for that project. And we think that there is potential for that, given the size of the site and the indications we’re getting from drilling.

To your Marqua phosphate project also located in the Northern Territory, what is its proximityto theMyrtle project?

Ian Mulholland: It’s a fair way away from the Myrtle project; it’s adjacent to the Northern Territory Queensland border. It is in a fairly remote location but we think being on the southern part of the Georgina Basin, it’s very prospective for phosphate and mineralisation and we’ve had some very strong exploration results there to date.  It needs a lot more drilling and a lot more development and to do that, we are probably looking for some sort of partnership with another company to bring that through. But you know, a large phosphate project just like the zinc project potentially, could be a real cash spinner for the company in the long-term.

Now you teamed up with Teck, the world’s third largest zinc producer. Could you elaborate on the terms of the partnership and their role in development?

Ian Mulholland: Sure. We did the deal with Teck in October 2010, so it’s now a deal that’s a little over a year old. The first stage of that deal is Teck spending $1 million on exploration and doing 2,000 metres of drilling. Now the expiry for that expenditure is July this year and Teck are well on track to meet that requirement. The next stage is for Teck to earn a 51 per cent interest by spending $5 million on the project by July 2014. And then if they’re getting encouraging enough results, they can go to 70 per cent by spending another $10 million on top of the $5 million, so $15 million in total by July 2018.

Looking at financials, what was your cash on hand at the end of the last quarter?

Ian Mulholland: The end of last quarter we had $2.4 million in the bank and that should be sufficient to keep us going for a little while yet. We don’t have any current plan to come back to the market, but I think that might change or could change potentially, if we’ve got a development scenario say for one of the gold projects, and we need a bit more cash to kick that off. But we’ll have a look at that in the second half of the year.

Finally Ian, what do you believe your main share price drivers will be in 2012?

Ian Mulholland: Well I think three things, well probably four things actually. Number one will be realising that near-term production potential and hopefully cash flow by the end of the year from the Mt Fisher gold project. The second thing will be demonstrating a larger resource at Mt Fisher, our target is 250,000 ounces.The third one will be the drilling that Teck will do at Myrtle on the project and potentially, that could be a game changer for us if they get some good results. And the fourth thing will be if we can do something with our phosphate project and move that forward, perhaps through some sort of partnership.

Ian Mulholland, all the best in 2012.

Ian Mulholland: Thank you very much.