We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Yes that was said at the GM, basically big co's need to show inventory on books chance for future development, as other resources are depleting
Maybe it wasnāt from a podcastā¦
This from captainbob recent notes from GM
āBush Ranger still very important asset, that it not forgotten, sort of thing majors want for inventory, regardless of wheter it will be developed or sit idle, seems there is an exit strategy from AA, that is not too expensive.ā
Thats where I prob got it from about the exit so perhaps Bob can offer any further comment to substantiate from maybe a private conversation or just an assumption.
Hey James, fair one, but is all subjective in this big guessing game we are all āstillā playing I suppose.
He commented in one of the pod casts if I recall correctly regarding the relatively cheap exit. Or did I dream it ?
As any future BR development will be so heavily front end loaded, the extent of study work and drilling involved toward pre feasibility is crucial for it to be on the radar of any major, my rationale is that it makes no difference to AAL if the project is passed on through negotiation with an updated buy back agreement attached to the sell on clause that the next aquirer will be incentivised by. Someone else can take it to the next study level for them.
Your suggestion of a partner to get it to 2mt is not āat allā unreasonable, however if through āchoiceā, I would question wether any financial benefits in the long run would be greater due to Xtr having to give away at least 50% if not far more, of the projects NPV that would ensure 3rd party full funding of an exploration programme that would not simply get it to 2mt, but also the absolute necessity to provide a supporting pre feasibility study with full mine plan with flowsheet design for any sale down the line to a developing major to be interested.
If there āisā a relatively cheap exit, this has got to be in the best interests of shareholders to continue its current Zambian strategy.
Certainly have a mutual respect James you do keep me in check which is much appreciated.
Hi Howezap
No need to say sorry, although not sure I get the subtlety in devised/designed in this context?
When did he suggest it was a possible cheap exit (I canāt recall what he said at AGM), but more importantly when has he given anything other than the best possible outcome rather than the likely one?
If I was AA I would sit on the clause, develop/acquire higher return projects on a risk adjusted basis in my pipeline then revisit BR when these opportunities run out. To my knowledge there is no cost associated to AA for sitting on their hands or particular risk of them losing out on the asset ?
Itās more than possible that a deal could be done, however I see it as unlikely. For me itās more likely that we do a deal with another smallish company for them to buy into the asset by drilling to get the asset to 2mt plus force AA hands and then share the prize.
Letās see how BR plays out and hopefully we get some news on Zambia soon!
Cheers
James
Ps I know I disagree with you a lot but I generally value your opinion/view (hope my messages come across like this)
Prospect ore/ xtr as good as the same thing.
Devised not designed
Sorry to be perdantic James
But of course in light of what Colin has told us about it being this legally binding agreement and the only way we can get out is if AA are decent enough to let it go. So agree It could be a concern. However he has back tracked on that apparent grip they had then, to now just suggesting there is a relatively cheap get out.
Maybe his comment is based on the fact that now neither of the buy back options are going to be met AAL will want another explorer to take it further , itās in their interests to with their royalty attached that can now be increased.
Why would they make xtr sit on it and wait for what?
Doubts a major would take it on without its PFS so likely a consortium or mid cap miner
The buyback was between AA and PropectOre, so in my view itās not fair to say it was a designed as a marketing tool. Itās simple a mechanism to allow AA to buy back if the resource is better than they expected. The problem is there is no way for XTR to force AA hand without spending serious cash or incentive for AA to make a decision.
I hope CB has had discussions with AA as he was talking about negotiating the buyback in last years AGM (Jul/Aug from memory), if this had been successful we would 100% been informed and CB would be straight onto the roasties proclaiming that the bow has been put round BR and itās going to market!
I still believe the buy back agreement, was devisedt to act as a marketing tool of which proved to be quite effective.
So I donāt think itās a case it is water tight. Got to remember, Jeremy Reid came with BR from AAL where he was head of exploration.
Its wording is really vague toward decision to mine, with a number target that is just plucked out the air. (CB quote)
It gives AAL the opportunity to renegotiate the NSR sell on royalty if they donāt want it. For all we know CB has had talks already. One of the assumptions in the pit optimisation assessment was the royalty set at 4%. Why would they round it up from 3.5%?
It beggars belief that CB signed an agreement that he now wants to get out of as it prevents him from selling to someone else other than AA.
Hi Lucky
Fair point, however numbers were updated late last year so Iād hope they were using reasonably up to date capex/opex e.g. inflation hasnāt had to much of an impact since ? Additionally as has been said there is room to optimise on both so Iām actually hoping/expecting the costs to come down. Obviously if you can save say AUD 50-100m in Capex costs this will pretty much directly add to your NPV.
Despite me getting a little more excited about the āvalueā of BR I still have major concerns about us being able to monetise it. If I was AA I would just sit on the option clause and see what copper does, there is no way XTR are going to hit 2MT (as we arenāt drilling) nor can we show we are going mining so what incentive do they have to make a decision other than a small (from memory) royalty if the mine ever gets built? If CB can pull a rabbit out of a hat and negotiate out of the clause without giving to much value away like he said at the last AGM Iāll start to get more excited about BR but I wonāt hold my breath!
Cheers
James
James, don't forget capex and opex also increase.
Part of the reason gold and copper is up, is because the cost of mining goes up with everything else at the moment....... but I agree, I would like the calculations done again.
I assume it wouldn't be too hard to update? Just changing figures in the special software model.
Also to take into consideration along with increase in copper price is āresultingā impact on increase in free cash flow after the optimisation of operating costs, metallurgical recovery rates, plant capacity and capital costs that are still ongoing. They included an illustrative 17th scenario based on reduction in processing cost and compared with same mining parameters for it produced an extra US$425m free cash flow on top from that reduction in processing costs.
This optimisation all in, is expected to have a positive effect on the economic performance when done, metallurgy recovery rates will improve from re sampling. The first sighter round only had 3 samples taken from RC, the other from the 4 total was from Ascot. The 3 from RC included a low reading of 78% from one in the NW that brings the average down to 88% used in all scenarios, so warranted more work. Other 2 had recovery rates of 89-90%.
Along with what you have illustrated james, itās not difficult to see how BR free cash flow can swing positively to give a ālowerā break even and hopefully produce a good enough cash margin once CapEx is included.
if you look at option 3 from the br conceptual study you can see it has an npv10 of circa -100m aud at usd9k copper, usd 1,900 gold and usd 22 silver.
if you update those numbers to todays spot prices on a *** packet you get approximately aud 250m additional revenue (this was done quick and dirty so i could have made an error).the mine life is approx 7 years so around aud 35m additional income per year which iād guess (not calculating it as i donāt know how long the mine takes to construct) would offset the negative npv. point iām trying to make is that according to my very rough *** packet and using todays spot prices (which iām not suggesting a buyer would do) i reckon br is a circa break even project.
We can argue ad nauseam, we can analyse and split hairs about xtr but it's obvious that xtr will only improve it's price and marketability only when CB retires, if ever!
BAM may indeed easily go BAM, Mr Zap
Think BAM may go same way as Pebble NtM
Both in highly environmentally sensitive regions which maybe why there is difficulties in selling.
Permitting will rely heavily on ESG due to its location nearby to lakes and watercourses.
Bushranger howeverā¦ā¦
Over at Landore Resources, Old Bill H - he wasn't old when he started on that 'exploration programme', but he's older than Mr CB now .. - has spent v approx. USD70m over 15 to 20 years proving up well what is long ago already showing as a good gold resource and may still turn out to be an amazing gold resource.. he's been trying to sell up for a half decent price for a few years now..no joy...and the company is all but gone under, Bill all but dead.. and the medium - longtermers long ago sunk - shareholders -eg me, even including a small amount of good range trading - all but wiped out...
Finding the Ascot crown has no relevance whatsoever to what they āneedā to show to justify drilling to find it.
BR is far more valuable with a financially viable mining concept than just the amount of contained copper eq. Nobody is likely to buy it without one!
Due to the very nature of porphyry huge bulk tonnages and total necessity to have on site processing leading to huge capital outlay. ( imagine the cost to haul 10m tonnes of ore PA off site! ) A viability of concept along with all the data surrounding the resource model is crucial to give an acquirer the financial and geological justification and confidence to take the project further.
The project value will be derived from an NPV model first and foremost, they will āthenā pay for what is in the JORC only, which will see discounted to reflect being only inferred.
Xtr just need to produce numbers that work to do this and sell, an acquirer might throw many more millions at BR and show that there is an alternative concept leading to feasibility that involves Ascot in that payback phase.
Xtr have really still only scratched the surface of what is in Bushranger.
You don't even know if they've found the Crown at Racecourse yet/already, not to mind starting another campaign on Ascot, Cygnus.. and we've already done a $10m + drilling journey.. plus a chunk more money on qualified third party models/reports etc..
Generally, Bushranger type exploration has shown itself to be too big a thing for a company the size of Xtr.l .. It needs to be parked until it - hopefully -can be sold, as currently is, to a bigger player imho
CB has already he's thinking is along my above lines.. so it's an academic debate anyway imho
I'm with you Cygnus7, although I tend to think they didn't hold out much hope to find the Ascot crown in the budget they had left, or it's so deep it's not practical to mine at the expected grades.
Howezap, if the resources had been spent looking for the crown of Ascot....doen't that mean that we would have two high grade parcels - admittedly a few km away from each other? Yes, people keep telling me that I'm missing the point but I'd rather have those two 'crowns' than a failed bridge.
You miss the point Cygnus 1.5-1.6 mt is no good if it cannot be all used in a viable mining concept, it was far more important to utilise as much of the lower grade bulk tonnages as budget would allow. We already have the RC high grade parcel that will kick start the projects early payback phase.
Howezap: yes, i understand they wanted to join them up but it seemed to me that that pipedream quickly faded. Two close by porphyries seemed like a good consolation. If the extra time and resources had been invested in finding the crown of Ascot we may well be talking about BR having 1.5 or 1.6 MT of inferred copper. Still, water under the bridge.
ānever did understand that ploy....ā
Before Ascot was identified as a seperate porphyry the vision/dream was that the potential size or amount of the racecourse open pittable material would extend all the way through to, and to include the southern anomoly (Ascot). With the disappointment that the grades between southern RC and Ascot were too low to see them join up RC and Ascot as a 3km long single mining concept. If so the economics would have been far stronger toward the overall financial performance of the model due to economy of scale, that has been recently released.
So was very important indeed.
Xtr now need to get the best economic performance out of the financial model from the material just from RC which is why Ascot material has not been included at this time in a mining concept due to it being isolated.
Far more drilling to Ascot and RC may change the dynamics but wonāt be for xtr to do.
The volume traded here remains utterly, totally and completely appalling -we're still talking, on average ish, 10k gbp ish a day - resulting in this stock moving up or down 5 or 10 per cent on a few grand more buys than sells or sells than buys ..
If even 50k gbp worth of buying here for a day or three my guess is this could spike 50 % + in short order..
.. and such a day or three will come along sooner or later, I'd expect.. RNS driven probably.. but POC - and POG to an extent too - keeping rallying alone might find some few with decently deep pockets willing to buy in decent size here.. and volume begets more volume...etc.. and the AIM market generally is less dead in April than it was thru winter imho..
Further drilling in BR in 2024 at least should absolutely not happen imho ..