ROX Resources Limited

RXL Details

Exceptional Intersection Result at Youanmi Gold Project:Australian Gold and Nickel company, ROX Resources Limited (ASX: RXL) is involved in mineral exploration. On November 19, 2019, the company informed the market about intersection of exceptional gold grades at the Youanmi Gold Project. The company has entered into a joint venture with Venus Metals Corporation for acquiring 50% stake in the Youanmi Gold Mine, that gave rise to the OYG Joint Venture. The drill hole MLRC020 delivered extremely high gold grades with enough visible gold present in the RC chips.

The Youanmi Gold Mine can be reached by the sealed Great Northern Highway for a distance of 418 km from Perth to Paynes Find and then for 150 km by the unsealed Paynes Find to Sandstone Road.

September’19 Quarter Key Highlights:The Youanmi South Prospect returned significant results in the quarter. The project Mineral Resource Estimate currently totals 12.4 Mt at 2.97g/t Au for 1,190,600 ounces of gold. During the quarter, a three-stage drilling program was completed at the Currans Find Gold Project. At the end of the period, the company was well funded with $5.38 Mn of cash and $3.92 Mn of other receivables and securities. Net cash outflow from operating activities for the period was reported at $2,279,000. Net cash outflow from investing activities for the period was reported at $8,000. Net cash inflow from financing activities for the period was reported at $3,752,000. Subsequent to the quarter, the company announced appointed well credentialed executive Dr John Mair to the Board as a Non-Executive Director.


September’19 Quarter Cash Flow from Operating Activities (Source: Company Reports)

FY19 Key Highlights for the period ended June 30, 2019:During the period, the Group incurred a net loss after tax amounting to $2,790,816 as compared to a loss of $3,239,946 in prior corresponding period. The loss included exploration expenditure charged directly to the statement of comprehensive income of $1,640,078, as compared to $1,914,176 in the previous year. Net cash outflows from operating activities were $2,947,183 as compared to $3,177,681 in the previous year. The Group held cash on hand of $3,912,742 as on June 30, 2019 as compared to $10,378,334 on June 30, 2018.

Stock Recommendation:RXL’s stock generated a positive YTD return of 137.50%. Over a span of three months and six months, the stock generated returns of -34.48% and 90.0%, respectively. The company has reported high-grade results at its JV Youanmi Gold Project.However, on the valuation front, its price to book value multiple on TTM basis stands at 2.1x, higher than the industry median of 1.5x, indicating an overvalued position at the current juncture. Moreover, the company’s profitability margins are negative.Hence, considering the valuation and margins of the company and volatile returns generated by the stock in the past few months, we recommend a “Sell” rating on the stock at the current market price of $0.022, up 15.789% on November 19, 2019 on account of decent exploration result at Youanmi Gold Project.
 
 
RXL Daily Technical Chart (Source: Thomson Reuters)

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