Up 130% in a year, ASX All Ords gold stock lifts off on 'valuable gold price protection' news

The All Ordinaries Index (ASX: XAO) is up 0.5% on Monday morning, with ASX All Ords gold stock Rox Resources Ltd (ASX: RXL) racing ahead of those gains.

Rox Resources shares closed up 7.1% on Friday, trading for 45.5 cents. At time of writing, shares are changing hands for 46.0 cents apiece, up 1.1%.

This sees shares in the ASX All Ords gold stock up a whopping 130.0% over 12 months.

Here's what's happening today.

ASX All Ords gold stock invests in gold price 'insurance'

The Rox Resources share price is pushing higher after the miner announced it has invested in put options to protects against any potential decline in gold prices.

The ASX All Ords gold stock bought the put options from an unnamed "leading Australian bank". The miner paid an upfront premium of $9.7 million for the put options, which cover 40,400 ounces of gold.

The company said this will provide it with important cash flow protection during the first full year of production at its Youanmi gold mine, located in Western Australia, helping to de-risk the project's ramp-up.

The put options will cover approximately half of the forecast FY 2028 gold production at Youanmi.

They have a strike price of $5,700 per ounce.

If you're not familiar with put options, this means that Rox Resources has the right, but not the obligation, to sell ounces at the strike price at monthly maturities, which are split between the four quarters of FY 2028.

The ASX All Ords gold stock highlighted that it retains full exposure to rising gold prices, as it can simply let the options expire if the gold price is higher than the strike price at the time of maturity.

Rox added that the put option strike price is $500 per ounce above its November 2025 Definitive Feasibility Study (DFS) gold price assumption of $5,200 per ounce.

The gold spot price currently sits at US$4,339 per ounce ($6,552 per ounce in Aussie dollars).

What did Rox Resources management say?

Commenting on the put option investment that looks to be helping boost the ASX All Ords gold stock today, chief financial officer Greg Hoskins said:

For a modest outlay of under $10 million, the strategic purchase of gold put options provides valuable gold price protection and underwrites strong cash flow generation during the first full year of production at Youanmi.

Importantly, Rox maintains full exposure to rising gold prices, with its exposure capped at the upfront cost. We look forward to finalising the competitive project financing process in the new year and progressing towards a Final Investment Decision.

The post Up 130% in a year, ASX All Ords gold stock lifts off on 'valuable gold price protection' news appeared first on The Motley Fool Australia.

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