Subiaco-based Rox Resources has entered into an agreement with a Chinese minerals company for the majority sale of its Myrtle zinc-lead project for $12.5 million cash.
Subiaco-based Rox Resources has entered into an agreement with a Chinese minerals company for the majority sale of its Myrtle zinc-lead project for $12.5 million cash.
In a statement today, Rox said it had signed a non-binding, non-exclusive deal to sell 80 per cent of the Northern Territory project to the unnamed Chinese company, which is currently conducting due diligence.
Under the proposed deal, both companies would form a joint venture to further explore and develop Myrtle, with the Chinese entity to manage the project and Rox to provide assistance.
The due diligence period is due to expire at the end of February next year.
Additionally, Rox said it has received several expressions of interest from international mining companies for Myrtle and in the company.
"Negotiations and discussions are ongoing, and a number of groups are currently conducting due diligence," Rox said.
Rox managing director Ian Mulholland said the interest from foreign entities underlines the unrecognised value of the company's assets including the Pha Luang project in Laos.
"There is a shared view from market analysts that metal prices, especially zinc, will rebound strongly in 2010, and clearly these international mining groups are taking a long term view of the inherent value that Rox represents", Mr Mulholland said.
Shares in the company have been placed in a trading halt pending an announcement regarding a capital raising. Shares last traded at two cents.
The announcement is pasted below:
Rox Resources Limited (ASX: RXL) ("Rox") is pleased to announce that it has received a number of expressions of interest from international mining companies, both in the Myrtle zinclead project, and in Rox as a corporate entity. Negotiations and discussions are ongoing, and a number of groups are currently conducting due diligence reviews.
Although no legally binding or exclusive agreements have been signed, a number of transactions have been proposed and are currently being considered.
One Memorandum of Understanding (MOU) has been signed with a Chinese minerals company ("Company"). The MOU, which is non-exclusive and non-binding, is subject to confidentiality and records a proposed transaction, subject to a due diligence period expiring on 28 February 2009, whereby the Company may acquire an 80% interest in the Myrtle Project (EL10316) for a cash payment to Rox of A$12,500,000.
At the completion of the due diligence period, if the Company proceeds with the transaction, Rox and the Company will form a contributing 80/20 joint venture to further explore and develop the Myrtle zinc-lead project. The Company will be the manager of the joint venture, and Rox may assist by way of its operational expertise in Australia.
The current Inferred Mineral Resource at Myrtle is 38 million tonnes grading 4.2% zinc and 1.0% lead, at a 3% Zn + Pb cut-off. It contains approximately 2 million tonnes of contained zinc and lead. At a higher cut-off (5% Zn + Pb), the deposit contains 15 million tonnes at 5.5% Zn and 1.5% Pb.
Rox's Managing Director, Mr Ian Mulholland, said "These strong expressions of interest from international mining companies underline the unrecognised value of the company's project assets at Myrtle in the Northern Territory, and Pha Luang in Laos. Further drilling, to be conducted as part of the ongoing exploration and development program at Myrtle, is expected to substantially increase the size of the resource.
"There is a shared view from market analysts that metal prices, especially zinc, will rebound strongly in 2010, and clearly these international mining groups are taking a long term view of the inherent value that Rox represents", Mr Mulholland said.
