Rox Resources (ASX: RXL, Share Price: $0.029, Market Cap: $34m) is one of our most respected exploration plays, with three highly-prospective projects – its Fisher East nickel sulphide project in Western Australia, followed by two secondary projects – the Reward zinc and Bonya copper projects, both situated within the Northern Territory. Importantly, there is strong activity happening on all project fronts.
Rox has announced a maiden Inferred Mineral Resource for its Teena zinc-lead deposit, situated just 8km west of the McArthur River zinc-lead mine in the Northern Territory. The Inferred resource confirms Teena as the largest and highest grade zinc-lead mineral resource discovered in Australia in over 20 years.
Market Significance
Rox’s share price has surged from a recent low of $0.01 during May to a current price of $0.029 in today’s trade. In fact the company’s share price more-than-doubled during Wednesday’s trade to $0.029 on the back of the Teena resource announcement. Teena has been demonstrated via drilling to be a world-class Mineral Resource with the estimated tonnage and grade of Teena comparable to other giant zinc-lead resources globally. At the same time zinc has risen from a low of $0.66/lb in early January to around $0.90/lb now (a 36% gain), whilst zinc inventories have fallen from 1.2Mt to 0.4Mt over the past 2 years.
Announcement Detail – Maiden Teena Zinc Resource
Rox has announced what is in effect a major project milestone, with the release of a maiden Inferred Mineral Resource estimate for its Teena zinc-lead deposit in the Northern Territory.
At a 6% Zn+Pb cut-off, the JORC (2012) Inferred Mineral Resource comprises 58 million tonnes grading 12.7% Zn+Pb (11.1% Zn, 1.6% Pb) for 7.4 million tonnes of contained Zn and Pb metal (6.5 Mt Zn and 0.9 Mt Pb) .
Zinc-lead mineralisation at Teena occurs as two sub-parallel lodes, termed the Lower Lode and the Upper Lode. The Upper Lode is thicker and higher-grade than the Lower Lode. At a 6% Zn+Pb cut-off grade, the Inferred Mineral Resources for each lode are estimated to be:
- Upper Lode: 45 Mt @ 13.7% Zn+Pb (12.0% Zn, 1.8% Pb) and
- Lower Lode: 14 Mt @ 9.4% Zn+Pb (8.2% Zn, 1.2% Pb)
Technical Significance
The Inferred resource has confirmed Teena as representing both the largest and highest-grade zinc-lead mineral resource discovered in Australia for more than 20 years (since Century in 1990) and it compares favourably with other giant zinc-lead resources globally. In terms of grade, Teena has zinc grades as high as currently operating mines at McArthur River, Mt Isa and previously at Century.
Teena contains a total of 16.3 billion pounds of zinc and lead metal (14.2 billion pounds Zn, 2.1 billion pounds Pb), which in terms of contained metal exceeds the endowments of either the Cannington or the Dugald River deposits.
There’s also strong potential for further resource expansion. So far 22 drill holes have been completed at Teena, with the first hole (Teena 1) completed in 1961 and then the next eight (Teena 2 – 8) completed during 1976-1977.
No further drilling occurred until the discovery hole by Teck during 2013. Since that time, Teck have completed 14 effective drill holes (TNDD009 – 022) for 14,679 metres. Of the total holes drilled, 17 have intersected mineralisation used to define the Mineral Resource. It is likely that the Mineral Resource will grow by further drilling, especially along the margins of the deposit.
Project Overview
Teena is situated just 8 m west of the McArthur River zinc-lead mine in the Northern Territory that’s owned by Teck Resources. The Teena deposit forms part of the Reward zinc-lead project, which is subject to an option/joint venture agreement, currently owned 49% by Rox and 51% by Teck Australia Pty Ltd (a subsidiary of Teck Resources).
Teck also has the option to increase its JV interest to 70% by spending up to $15 million in total by 31 August 2018 – and as at 31 March 2016, Teck had spent approximately $13.85 million. Rox’s Myrtle/Reward zinc-lead tenements encompass an area of 670 sq km and lie adjacent to the McArthur River zinc-lead mine.
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The first deposit explored, Myrtle, has a current JORC 2004 zinc-lead Mineral Resource comprising 44 Mt @ 5.0% Zn+Pb reported at a 3.0% Zn+Pb cut-off (Indicated: 5.8 Mt @ 3.6% Zn, 0.9% Pb; Inferred: 37.8 Mt @ 4.2% Zn, 1.0% Pb).
Drilling at the Teena zinc-lead prospect between 2013 and 2015 identified significant zinc-lead mineralisation over thicknesses exceeding 20 metres and over a strike length of at least 1.3km.
Summary
We initially acquired Rox Resources at a price around $0.019 during September 2015 – representing a current gain of 53%.
We retain our positive outlook on Rox Resources, given the company’s high level of exploration activity on all fronts. The company has managed to continue to enhance the value of its projects, either directly or via committed joint venture partners. The company is therefore well-placed to advance its projects when nickel, zinc and copper prices improve. Accordingly, Rox Resources will remain firmly held within our Portfolio.
