The Youanmi gold mine, 480km from Perth, has produced ~667,000oz of gold (at 5.47g/t) since discovery in 1901 during three main periods: 1908 to 1921, 1937 to 1942, and 1987 to 1997.

When the mine closed in the 1997, gold was selling for just $AUD400/oz. Even so, it was still profitable.

In 2019, Rox Resources (ASX:RXL) farmed into the project believing there was life in the old girl yet.

After many kilometres of drilling RXL has now defined a substantial, high grade 3.02Moz open pit and underground resource.

A recently published Scoping Study – the first proper look at the economics of (re)building a project — contemplated a 71,000oz per annum project.

Over an initial eight-year mine life it would produce 569koz of gold at an all-in sustaining cost of $1,546/ounce.

The pre-tax NPV came in at just over $300 million with an internal rate of return of 45% assuming a gold price of $2,450/oz.

Stockhead sat down for a chat with new RXL managing director Rob Ryan about being in the box seat to capitalise when gold sentiment returns.

The old Youanmi mine and processing plant. Pic: Rox Resources


Things are looking a bit brighter for gold stocks these days.

“It’s only a matter of time before the gold price really gets back to its highs — $US1,800, $US1,900, US2,000/oz,” Ryan says.


And it goes without saying that companies like Rox — which are plugging away at their gold projects while sentiment isn’t so good – will be in the box seat when things turn around.

“100%. It’s the companies that forge ahead when prices aren’t as good, continuing to develop projects and get things further along the curve,” Ryan says.

“Then, when the metal prices go up these first movers are generally he most profitable.”


What attracted you to the MD role at Rox?

“I have followed Rox for a long time, and always liked their Youanmi project,” Ryan says.

“I joined the board earlier this year to help give a bit more flavour from a mining perspective to the scoping study. Since then, it has been a general transition into the MD role, as we look to a different set of skills to take the project [into development].

“My background is refractory gold orebodies, as well as underground mining, operations, and feasibility studies.

“Prior to joining Rox, I was acting COO for Wiluna Mining, basically working for the administrators to re-establish the operation and cut costs.

“We upped production from about 13,000oz to 20,000oz a quarter. We got it turned around from that aspect and it is now on the market for sale.

“Prior to that I was CEO of Bardoc Gold, where I came in [when the company was] in a very similar position to Rox.

“They had a $30m market cap at the time, had just raised some money and were looking to go through feasibility studies.

“I led it through PFS, DFS studies and got the project all the way up to the debt financing but the equity markets weren’t backing gold developers at that time.

“So, we ended up selling the project to St Barbs (ASX:SBM) for ~$150m.  Not a bad turnaround from a $30m market cap, 3 years beforehand.”


We’ve seen new gold producers over the past few years be hit and miss for various reasons: Dacian, Gascoyne, Wiluna, Ora Banda were misses; Capricorn, West African were hits.  Is there anything in a more general sense that the industry can learn from these winners and losers?

“Yes. A lot of it comes down to having a team with the experience to execute mining operations,” Ryan says.

“Look at the West African (ASX:WAF) model, as well as Capricorn (ASX:CMM) — these guys have track records of doing it in the past.

“That sort of experience speaks volumes. I like to think that with my operational background in running mining operations, I know how to execute them, and I know how to do them well.

“I have a strong technical background as well. I know what works, and I knocw how to get things to work.”


People can get scared when they see the words ‘refractory gold’. What do you say to that?

Refractory gold ores have ultra-fine gold particles disseminated though the mineralisation, which make them hard to recover using standard processes.

“It is an industry I am very familiar with. [Working with refractory orebodies] isn’t difficult at all. It has a clear pathway to commercialisation,” Ryan says.

“One of the best mines and most profitable mines I ever worked at was Kanowna Belle.That asset is a refractory orebody.

“I still remember doing budgets there with Barrick Gold and it was turning out over $250m a year in free cash.

“[Another is] Silver Lake’s Deflector, probably one of their highest returning assets. There are a lot of analogies between Younami and Deflector.

“Narrow vein orebodies, high grade underground, +5g/t coming from the underground, and low deleterious elements in the gold concentrate.

“Producing a gold in concentrate is not new across the industry. 12% of the world’s gold production comes from gold in concentrate.

“And one thing I noticed is the quality of the concentrate from Youanmi is very good.

“I have already had several queries from offtakers that I have worked with over the past couple of years, expressing an interest to get in early.”


In the Scoping Study, you increase production to ~100,000oz in Year 6. Costs also drop down to about $1000/oz.  Is it too simplistic to assume that increasing production more generally = lower costs?

“Yes, it does come with economies of scale,” Ryan says.

“For instance, we are looking at a 480,000tpa processing circuit as part of the scoping study, but I think we have the ability to upscale that processing plant for very minimal capex.

“The underground itself could produce 600-700,000tpa, plus. At that point you are looking at a more consistent, 90,000oz to 100,000oz per annum.”


100,000ozpa is a nice round number.

“I think it becomes relevant as an operation at that scale,” Ryan says.

“Youanmi is very profitable at 70,000ozpa, but if we do a step change and get some extra tonnes through the mill all your operating costs come down.

“As you introduce scale, things get cheaper. I think that is the next step we want to look at.”


Any other key stats from the Scoping Study that stood out for you?

“I think the preproduction capex is not the be sniffed at,” Ryan says.

“We’re looking at sub $100m, which is easily financeable for a company of this size.”

Key numbers from the recent scoping study. Pic: Rox Resources


And you continue to hit high grade gold outside the resource envelope. How much gold is out there?

“We have a clear understanding of the main mineralisation controls at Younami,” Ryan says.

“Where the structures intersect or run up alongside the granite contact you get these high-grade plunging zones.

“Main Zone, Hill End, Link as well as Kathleen further to the North – all of those areas are open down plunge.

“I see those adding further ounces as we continue to drill.

“We have also had a few exploration successes. There was Grace, which is in the granites, and out into the hanging wall we’ve made a recent discovery called Midway.

“Midway is a different mineralisation event again, which is interesting because it opens a whole new [set of] targets.

“That will add further spice to the story as we continue to explore around the area.”


Rox just raised some cash. What will you use that for?

“That will be used to progress the feasibility study and the drill out of the resource,” Ryan says.

“The Cannon [takeover] bid is also effectively worth $3.8m to us. This, along with the current raise and SPP, should give us in the vicinity of $9m in the bank.

“It allows us to conduct a drill out of the inferred resource, look to commence the PFS, and get out a maiden reserve in the next 12 months.”

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