Rox Locks in 50% of Youanmi’s FY2028 Gold at A$5,700/Oz Strike Price
Rox Resources has strategically purchased gold put options covering half of its forecast production at the Youanmi Gold Project for FY2028, locking in price protection while retaining upside exposure.
- Gold put options cover 40,400 ounces, about 50% of FY2028 production
- Strike price set at A$5,700/oz, A$500 above DFS gold price assumption
- Upfront premium paid totals A$9.7 million
- Options provide downside protection without capping upside gains
- Supports cash flow stability ahead of final project financing and investment decision
Strategic Hedging Ahead of Production
Rox Resources Limited has taken a proactive step to manage price risk for its Youanmi Gold Project by purchasing gold put options that cover approximately half of its forecast production for the 2028 financial year. This move is designed to provide a financial safety net during the critical first full year of production, ensuring more predictable cash flows as the project ramps up.
The put options, secured with a leading Australian bank, cover 40,400 ounces at a strike price of A$5,700 per ounce. This strike price sits comfortably above the company’s November 2025 Definitive Feasibility Study (DFS) gold price assumption of A$5,200 per ounce, reflecting a confident yet cautious approach to market volatility.
Balancing Risk and Opportunity
By paying an upfront premium of A$9.7 million, Rox Resources gains the right; but not the obligation; to sell gold at the strike price across monthly maturities throughout FY2028. This structure effectively caps downside risk while allowing the company to benefit fully if gold prices rise above the strike price, preserving upside potential.
Chief Financial Officer Greg Hoskins highlighted the strategic value of this arrangement, noting that the modest outlay provides valuable price protection and underwrites strong cash flow generation during Youanmi’s ramp-up phase. This financial instrument is a clear signal of Rox’s commitment to prudent risk management as it approaches key project milestones.
Implications for Project Financing and Future Growth
The timing of this hedging strategy is significant, coming ahead of Rox’s finalisation of competitive project financing and a Final Investment Decision (FID). By mitigating price risk on a substantial portion of its forecast production, Rox enhances its financial stability and attractiveness to lenders and investors.
The Youanmi Gold Project itself remains a high-grade, high-margin asset with a global mineral resource of 2.2 million ounces of gold. Rox’s approach to balancing risk and reward through these put options may set a precedent for how junior gold developers manage market uncertainties while advancing towards production.
Looking ahead, the market will be watching how Rox manages the remaining 50% of production not covered by options and how gold prices evolve relative to the strike price. The company’s ability to execute on its strategic plan and secure financing will be critical to unlocking Youanmi’s full value.
Bottom Line?
Rox’s gold put options hedge offers a measured blend of protection and opportunity, setting the stage for a pivotal year at Youanmi.
Questions in the middle?
- How will Rox manage price exposure on the remaining 50% of FY2028 production?
- What are the terms and timing of the anticipated project financing and Final Investment Decision?
- How might fluctuations in gold prices relative to the strike price impact Rox’s cash flow and profitability?
