Rio Tinto is to become the major shareholder in West Perth-based Rox Resources after reaching an agreement over the Reward zinc and lead project in the Northern Territory.
Rio Tinto is to become the major shareholder in West Perth-based Rox Resources after reaching an agreement over the Reward zinc and lead project in the Northern Territory.
Rox and Rio Tinto subsidiary North Mining reached a Sale and Purchase agreement for the Reward project in September 2008 which entitled North to a lump sum cash payment of one dollar per tonne of the mineable resources stated in a Bankable Feasibility Study.
The companies have now reached an agreement to remove the lump sum cash payment in return for the issue of 20 million ordinary Rox shares.
Rox chairman, Jeff Gresham said it was evident that the lump sum payment was becoming a significant impediment to the further development of Myrtle.
"We are very pleased to have concluded this arrangement with North which clears the path for Rox to expand the resource and evaluate development options without needing to consider the payment to North if a decision to mine were made," Mr Gresham said.
Rox managing director, Ian Mulholland said that the agreement was a positive outcome for both Rox and the Myrtle project.
He welcomed North as Rox's biggest shareholder with approximately 8.4 per cent of the issued shares.
See full company statement below:
Rox Resources Limited (ASX: RXL) ("Rox") is pleased to announce it has reached an agreement with North Mining Limited ("North"), a 100% subsidiary of Rio Tinto Limited, for the removal of a significant encumbrance over the Reward project and the Myrtle deposit in the Northern Territory.
The agreement will establish North (or a wholly-owned member of the Rio Tinto group) as Rox's largest individual shareholder.
Under the terms of the Sale and Purchase Agreement between Rox and North for the Reward project, dated 17 September 2008, North is entitled to a lump sum cash payment of A$1/tonne of the mineable resources stated in a Bankable Feasibility Study payable upon a Decision to Mine.
Agreement has been reached with North for the removal of this lump sum cash payment in return for the issue of 20 million ordinary Rox shares. Under the terms of the Sale and Purchase Agreement, North will retain the right to receive a 2% net smelter return royalty.
Rox Chairman, Mr Jeff Gresham, said that over the last two years the Myrtle deposit had developed into a significant new zinc discovery. However, it was evident that the lump sum payment was becoming a significant impediment to the further development of Myrtle.
"We are very pleased to have concluded this arrangement with North which clears the path for Rox to expand the resource and evaluate development options without needing to consider the payment to North if a decision to mine were made," Mr Gresham said.
The Myrtle zinc deposit currently has an indicated and inferred resource of 15.3 million tonnes grading 5.45% zinc and 1.40% lead for 6.84% combined zinc + lead (see Table 1), and is set to expand with further drilling.
Rox Managing Director, Mr Ian Mulholland, said that the agreement was a positive outcome for both Rox and the Myrtle project and welcomed North as Rox's biggest shareholder with approximately 8.4% of the issued shares.
"Given the potential size of the deposit at Myrtle, this agreement removes what could have been a multi-million dollar payment," Mr Mulholland said.
Rox has developed a strong exploration target for high-grade mineralisation at Myrtle (see Figures 1 and 2) based on clear analogies with the adjacent world class McArthur River deposit (pre-mining resource of 227 million tonnes grading 9.2% zinc, 4.1% lead, 41g/t silver). Drilling of the high grade target is expected during the second half of 2010.
In addition, the discovery of new mineralisation at the Eastern Zone (Figure 1), which remains open along strike and at depth, has not been included in the mineral resource and warrants aggressive follow up.
