Rox targets improving nickel market

Rox managing director Ian Mullholland.

Rox Resources has been busy since winning Explorer of the Year at the 2015 Australian Mining Prospect Awards.

When Rox won the award, it had three active projects: Mt Fisher and Fisher East in Western Australia and a minority interest in the Reward zinc joint venture in the Northern Territory.

The company discovered nickel sulphides at Fisher East in 2013 during an exploration program designed to target gold and nickel, eventually determining a mineral resource of 2 million tonnes (Mt) of ore at 2.5 per cent nickel for 50,000 tonnes of contained nickel.

Given the realities of a depressed share market and nickel price at the time, Rox managing director Ian Mulholland states he found the win “quite a surprise” and that the recognition from peers was very satisfying.

“Old heads in the exploration game were congratulating us and were impressed with our work, but the market, being driven by commodity price sentiment, did not,” he explains.

Since the award, several major developments at Rox have helped to shape the company further. It sold its 49 per cent minority interest in the Reward JV for the equivalent of $20 million cash in October 2016 when JV partner Teck Australia (a subsidiary of Canadian major Teck Resources) exercised its pre-emptive right to match an offer from Marindi Metals for the purchase of Rox’s share.

The deal led to Supreme Court action between Rox and Marindi, which claimed Teck’s exercise of its pre-emptive right was not valid; this was eventually settled out of court with Rox paying Marindi an already agreed break fee of $300,000.

Things could have been different for the JV — Rox and Teck had received an AMEC Prospector Award for the Teena discovery at the project, but sufficient market value was not forthcoming.

“In JV with Teck, we had defined a resource at the Teena prospect of 58Mt at 12.7 per cent zinc and lead,” says Mulholland. “It was a great discovery, but the market was not giving us any value in our share price for this project, so our best option was to monetise it and use the money to do something else.”

The influx of funds means Rox does not need to raise money in the short- to medium term, proving useful for additional exploration ventures.

Just one day after the shares in Reward were sold, Rox announced the acquisition of the Collurabbie project from Falcon Minerals for $25,000 in cash and 7,500,000 Rox shares, a total equivalent to $150,000.

Within 70km of the Fisher East project, it represented a significant expansion for the company’s nickel portfolio. The company negotiated a cheap deal on the prospect due in part to the plunge in nickel prices at the time, but with the metal’s recent resurgence it could prove a wise investment.

Rox is hopeful the “prediction of a strong nickel price environment over the next decade” eventuates, according to Mulholland.

“We are starting to explore the tenements, but since 2015 things have been really tough for explorers, especially nickel explorers,” explains Mulholland. “The nickel price had a plunge that no-one expected and it put a lot of nickel mines out of business.

“We thought we would try to identify some prospects that might add to what we have, so we identified Collurabbie and negotiated a good deal on that. If we can find more massive sulphide deposits like the one already present, it could be quite exciting.

“Demand for nickel is now starting to pick up with the advent of electric cars and other requirements for large electric batteries — for example, the Tesla mega-battery in South Australia.”

For Rox, things are looking up, with a sharp eye for a discovery, steady cash balance and renewed sense of focus. The company possesses some of the highest-grade nickel sulphide deposits in Australia and is among a small number of ASX-listed companies to also have JORC mineral resources of nickel sulphides.

“Our cash position allows us to undertake significant exploration without the pressure of a forthcoming capital raise which dogs so many junior explorers,” says Mulholland.

“Hopefully, we will find ourselves in a position in the not too distant future where we can be considering development plans for Fisher East and Collurabbie. In the meantime, we’ll keep on exploring, which is something our peers recognise that we do very well.”

Nominations are now open for the 2018 Prospect Awards.

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