Is the Rox Resources Share Price in Restart Mode? (ASX:RXL)

Is the Rox Resources Share Price in Restart Mode? (ASX:RXL)

Like many of its peers, the Rox Resources Ltd [ASX:RXL] share price enjoyed a stellar run through the midst of the gold explosion last year.

However, as the gold price went in search of a more sustainable level during investors’ return to equity markets, the RXL share price fell into steady decline.

RXL share price chart

Source: Tradingview

Today, it appears interest in the explorer could be picking back up on the announcement of solid recoveries from metallurgical testwork.

At time of writing the Rox Resources share price is up 12.50% to trade at 3.6 cents per share.

REVEALED: What’s Next for Aussie Gold Stock Prices? Learn more.

Is this the end of the orphan period?

Investment in gold stocks can take several different phases.

Typically, before an explorer is about to move into development stage at their project, the share price declines as the speculators take their profits in search of other upstarts.

That could be the case for RXL.

Today, the company announced results of their metallurgical testwork from their joint venture at the Grace discovery at Youanmi.

Gravity and leach testwork show excellent total gold recoveries at Grace of up to 99.8% in fresh rock and 98.7% in oxide mineralisation.

Rox Resources say the results confirm that new zones of gold mineralisation discovered through late 2019 and 2020 are likely to be amenable to conventional gravity and cyanide processing.

Meaning extraction costs could be kept to a minimum.

RXL’s Managing Director Alex Passmore said he was pleased with the results, commenting:

Particularly encouraging is the relatively high gravity recoverable gold from a coarse grind. Gold ores at Youanmi show a variety of metallurgical characteristics however what it is becoming evident that the granite hosted, low sulphide mineralisation such as that at Grace are free milling.

For those not up with geology lingo, free milling essential means appropriate for conventional processing.

Does this mean a return for the RXL share price?

Like I mentioned before, investing in gold stocks in cyclical.

What can happen is that once speculative investors have taken profits and left, institutional investors swoop in during the development phase (they have the capital to fund this).

Metallurgical testwork is often used in scoping and feasibility studies to understand whether a project is economically viable.

Rox Resources’ results suggest that rock mined at the Grace discovery could be viable, although the explorer did not comment on the potential economy of the project.

As for the share price, RXL announced last year that a maiden resource estimate for the Grace discovery could be expected in the first quarter this year.

Drilling is also set to continue, focusing on two major new targets.

Meaning, we could see interest return in the downtrodden stock.

And with Australia’s gold scene heating up, which is set to overtake China as the world’s gold capital, the outlook for stocks like RXL might be better than anticipated. In her latest report, gold expert Shae Russell breaks down what Australia becoming the new gold ‘epicentre’ means for gold and your Aussie gold stocks. Click here to download the free report.

Kind regards,

Lachlann Tierney

For The Daily Reckoning Australia