In a June 30 research note, Red Cloud Securities analyst Derek Macpherson reported that Vox Royalty Corp. (VOX:TSX.V) agreed to acquire a 1% nonsmelter returns (NSR) royalty on certain Bulong gold project concessions in Western Australia for AU$750,000. The deal is expected to close by the end of September 2020.
Macpherson noted that this is the final of the four acquisition agreements the company, before going public, said it intended to enter into. Vox is acquiring the Bulong royalty from an auto parts maker, RPM Automotive Group. The total consideration to be paid by Vox consists of AU$400,000 in cash and AU$350,000 worth of shares, about 100,000.
"We are encouraged by Vox's pace and disciplined growth strategy," wrote Macpherson. "These acquisitions from nontraditional vendors highlight what makes Vox a unique new entrant in the royalty space."
Macpherson reviewed the Bulong NSR royalty and related transaction. He highlighted that the royalty is on an asset that is close to production. The next step is a feasibility study, which is expected from Black Cat Syndicate, the project's owner/operator, in Q3/20 on the Myhree deposit. Myhree has a total resource of 1,427,000 tons at 3.4 grams per ton gold, containing 155,000 ounces of gold, and resource expansion potential.
"The high-grade tenure of this open-pit deposit makes it amendable to toll treating, providing a relatively short path to production," added the analyst.
The royalty encompasses nine Bulong property tenements, including four mining leases, four prospecting leases and one exploration license, which span 82 square kilometers and are within driving distance of five mills.
Macpherson pointed out that this Toronto-based company closed a CA$13.75 million financing earlier this year and, thus, is well funded.
Due to the significant impact of acquisitions on small companies, Red Cloud has not yet determined a valuation, target price or rating for Vox, Macpherson indicated and added, "We expect the company's share price to perform in line with the quality of its acquisitions."
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Disclosures from Red Cloud Securities, Vox Royalty Corp., Corporate Update, June 30, 2020
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