Resources Top 5: This explorer just sold its share of a +3Moz gold project for more than its own market cap value

Rox Resources to buy Venus Metals stake of Youanmi gold JV for 110m shares, worth ~$30m at current prices
Some respite today for Jervois Global, which is down 41% since announcing plans to suspend final construction at Idaho Cobalt Operations
Gold-base metals miner Aurelia says the process for a new credit facility to build Federation polymetallic mine is “progressing well”

Here are the biggest small cap resources winners in early trade, Friday March 31.

VENUS METALS (ASX:VMC)

For a micro-cap explorer, VMC has been remarkably consistent share-price wise over its long life in a sector known for its extreme highs and lows.

In the last five years the stock has settled at an average ~15c per share, with short term peaks (to a high of 30c) and troughs (to a low of 12c).

Not saying that’s a good or bad thing. Just an observation.

Its main game was the advanced Youanmi gold JV with Rox Resources (ASX:RXL), but this asset is now set to be consolidated into RXL to simplify the ownership structure ahead of development.

This means a solid payday for VMC shareholders.

RXL will shell out 110m shares to VMC for its part in the JV – worth ~$30.8m, equivalent to VMC’s entire market cap — with 55m of those to be distributed to shareholders.

The remaining 55m shares with be retained by VMC, which will own 18% of RXL once the deal completes.

There’s also potential for these shares to be worth a lot more as a development decision approaches, with VMC noting that RXL “currently trades at a resource multiple that is a substantial discount to its peers”.

Managing director Matt Hogan, a veteran dealmaker who once sold an iron ore company to BHP for $204m, will be appointed to the RXL board as non-exec director.

The deal also includes all VMC’s gold interests in its other joint ventures covering other regional areas, but it will retain a bunch of other projects prospective for lithium, vanadium, base metals, and rare earths.

In 2019 RXL farmed into Youanmi, a historic mine which produced ~667,000oz of gold (at 5.47g/t) 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.

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 operation.

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.

A pre-feasibility study is underway.

“Consolidating the gold interests under the Youanmi gold project under Rox’s ownership is a logical transaction that is expected to deliver compelling value for both sets of shareholders and we are enormously excited about the strong foundation this transaction creates for the project’s ongoing exploration and development,” RXL managing director Rob Ryan says.

“2023 is set to be a milestone year at Youanmi, with drilling underway to convert existing Inferred Resources to Indicated status to support the Pre-Feasibility Studies.

“We are also very excited to see ongoing results from the Midway and Youanmi South discoveries, which are potential gamechangers for the Youanmi gold project.”

$30m capped VMC is up 25% year-to-date. It had $5.1m in the bank at the end of December.

VMC, RXL share price charts

JERVOIS GLOBAL (ASX:JRV)

(Up on no news)

A bit of respite today for the besieged cobalt play, which has plummeted 41% since announcing plans earlier this week to suspend final construction at Idaho Cobalt Operations (ICO) in the US.

It cited continuing low cobalt prices and inflationary impacts on construction costs as the main reasons for the decision.

Having already spent US$130m, JRV expects to complete construction and commission ICO when cobalt prices recover.

Three-month LME cobalt is currently fetching US$34,180/t, down hard from over US$80,000/t at this point last year.

“Jervois has determined that not mining ICO cobalt at cyclically low prices, will preserve the optionality and inherent strategic value of ICO for shareholders and key stakeholders including local communities and the State of Idaho,” JRV CEO Bryce Crocker said.

“The Company also views not mining ICO at current prices is consistent with US Government critical mineral policy objectives.”

Opened to much fanfare last year, the mine in Salmon, Idaho, was expected to produce 1915t of cobalt, 2900t of copper and 6700oz of gold per year with an initial seven-year mine life and was to be the US’ only primary domestic source of mined cobalt.

The $141m capped stock is now down an astonishing 93% on a peak price of 98c in April last year.

JRV share price chart

AURELIA METALS (ASX:AMI)

Gold-base metals miner AMI says the process for a new credit facility to fund its Federation polymetallic mine development in the Cobar basin of NSW is “progressing well”.

Commercial terms are largely agreed, subject to final and binding documentation, it says.

AMI has spent years building up to the development of Federation, but faced a revolt last year after word of a placement got out ahead of the release of its feasibility study, prompting investors terrified of a dilutive, discounted capital raising to run for the hills.

AMI’s shares were not in a halt, tanking the price and hurting the prospects of raising the finance for the $108m development.

The high-grade deposit has a zinc dominant reserve of 2.2Mt at 8.9% Zn, 5.3% Pb, 1.4g/t Au, 6.0g/t Ag and 0.3% Cu. Production life is estimated at an initial eight years, with ore to be processed at AMI’s nearby plants at Peak and Hera.

In preparation for the restart of activity at Federation, an update of the Federation Mine design, scope and capital cost estimate has been undertaken and is near complete, AMI says.

An update is due next month.

The end of operations at AMI’s nearby Hera mine – which is currently transitioning into care and maintenance — has also provided opportunities to reduce capital cost through the reuse of assets and infrastructure, it says.

Its other two operating mines include ‘Peak’ in the Cobar Basin, and ‘Dargues’ in southeastern NSW.

Next on AMI’s development schedule will be ‘Great Cobar’, another high-grade base metals deposit in the Cobar Basin.

The $150m capped stock is flat year to date, but down a massive 74% over the past year.

AMI share price chart

VRX SILICA

(Up on no news)

This near term miner has four large scale silica sand projects in WA, with ‘Arrowsmith North’ south of Geraldton ranking amongst the most advanced in Australia.

Arrowsmith North has a Proved and Probable Ore Reserve of 221Mt on granted mining leases.

All VRX is lacking in terms of approvals is the Environmental Review Document (ERD), which was first submitted in May 2022.

Requests for additional info made in early June and mid-November were answered by the company in June and December, respectively.

A further response and/or acceptance of the ERD is expected soon, which will then initiate the four-week Public Environmental Review.

VRX has already purchased some of the long-lead items for the sand processing plant and continues to engage with potential buyers.

The $70m capped stock is flat year-to-date, and down 66% from its January 2021 peak. It had $5.1m in the bank at the end of December.

VRX share price chart

RAGUSA MINERALS (ASX:RAS)

This Jerko Zuvela-backed explorer has its hands full with a bundle of Australian critical minerals projects, including Lichfield and Daly River in the NT (lithium) and Burracoppin in WA (kaolin-halloysite).

Earlier this week lithium drilling kicked off at the ‘Tank Hill’ prospect in the NT, where two diamond holes have been designed to intersect two pegmatite bodies at ~100m depth.

Both peggies are exposed at surface where they measure 20-25m wide, before dipping vertically.

An old drillhole about 120m away hit one of the peggies at between 37m and 66m vertical depth, with assays returning grades peaking at 0.37% Li2O within the lithium depleted weathered zone.

If the new drilling results are promising RAS plans to keep punching holes into the prospect and the wider project area.

“We are encouraged by the historic drilling results, providing additional confirmatory data for the next phase exploration works,” Zuvela says.

“Ragusa is in a strong position to rapidly accelerate lithium exploration at our project within a proven high-quality lithium district in a Tier 1 jurisdiction close to major infrastructure at a time of record lithium prices.”

The $13m capped stock is down 20% year to date, and 78% from its September 2022 peak. It had $2.6m in the bank at the end of December.