Managing director Rob Ryan believes a significant discovery at Paddy’s Lode 250m south of the Youanmi main pit could be a game-changer for Rox, opening up an area previously thought to be barren.

Youanmi is about 480km north-east of Perth in the central part of the Youanmi greenstone belt, which is also home to Ramelius Resources’ Penny West gold mine.

Youanmi was mined by GMA up until 1997 when the gold price plunged to $450 an ounce. It produced 667,000 ounces of gold grading at 5.42g a tonne.

Rox sees huge potential to grow the gold resource at Youanmi following “bonanza” intercepts at Paddy’s and another emerging discovery, Midway.

The total potential strike length of Paddy’s is 900m — the same as the Youanmi main pit that hosts 2 million ounces of resource and ore.

If Rox were to build an underground mine today it would be looking to mine about 500,000 to 600,000 tonnes a year and producing 80,000oz to 100,000oz, Mr Ryan said.

But that could potentially double with a second operation in the south.

“All of a sudden you’re looking at your 150,000-200,000 ounce-style per annum operation,” Mr Ryan said during a tour of Youanmi this week.

“Probably the only comparable company at that sort of scale at the moment and that grade is Bellevue, so it does become a significant development for the company,”

“What we’re finding in this whole corridor now is all these new strike potential additions that can really change the scale of the development we’re looking at.”

Rox is also consolidating its joint venture with Venus Metals to take full control of the 3.2moz Youanmi deposit and accelerate exploration, which had been hindered by the 70-30 joint ownership structure.

However, Mr Ryan acknowledged resolving the JV could also make it easier for a friendly neighbour such as Ramelius to make a play for Rox, saying: “(It) does open that up as a potential but I think there’s a lot more value in us as a company looking to take this forward.”

Consolidation in the gold sector is expected to continue following a rush of activity, including Newmont Corporation’s $29 billion takeover of Newcrest and St Barbara become the subject of a bidding war between Genesis Minerals and Silver Lake Resources.

Rox would have a market cap of about $120 million, up from about $84m currently, post consolidation — due to occur around the end of the financial year.

That compares to Bellevue, which is worth $1.43 billion and is due to start produce first gold from its mine 40km north of Leinster in the December quarter.

Rox chief financial officer Chris Hunt expected Bellevue coming online would help the junior, noting the two projects shared similar characteristics.

“The market is fickle for explorers at the moment . . . but (Bellevue) just shows the potential that we have,” Mr Hunt said.

“If you can have something that’s bigger scale it pays back that capital quicker.”

Mr Ryan said Rox would focus its efforts on further exploring the Paddy’s structure to the south and understanding expansion opportunities rather than rushing into a pre-feasibility study, noting it didn’t make sense to focus on completing a processing plant design if there was potential to upscale.

“In 12 to 18 months’ time I’d like to be sitting here with a new resource at the area south of Youanmi, potentially on the way to doing a pre-feasibility study on what would be a more expanded processing plan,” he said.

Rox will need to raise more money to explore. Mr Ryan noted the $8.2m cash in the bank would only see it through to the end of the year.

Rox shares have rocketed about 113 per cent, or 21¢, since the start of the year. Shares were trading at about 38¢ at 1.20pm on Friday.

Mr Ryan said an updated resource model for Youanmi could be released later this year but it may take longer to get a maiden resource at Paddy’s.