George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
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Given the data we know about so far, I tend to disagree on CE being a tier 1 asset as yet. Perhaps their modelling points to further areas of mineralisation on the perimeters, but so far the grades have been good but only contained in fairly modest intervals, so the in the ground value probably amounts to no more than our present Mcap, IMO. I have a feeling the underlying excitement must pertain to other areas of exploration.
In the July conference call, Rémy stated they are not looking to establish JORC compliant assets but instead create value through ongoing drill results. Things could change though of course.
ARCM might consider an Earn-In or sale of Cheyeza East project area and reserve the rights over the rest of its licence area until it has completed more work and/or giving AA right of first refusal over any eventual sale? Just a thought as the licence area is just huge!
I REALLY want to understand how far along ARCM is from Desktop Study > PFS > DFS timeline with ARCM Priority targets at Cheyeza East and Muswema given published data. IMHO the ARCM website is frankly rubbish and does little to present any of the projects, maps or sample / drill data in any useful way, shape or form. The RNSs and indeed Investor presentations make it difficult to get a chronology or indeed summary of drill data results to date by target.
ARCM presentation May-20 (before AA Exclusivity Agreement signed) says 17,000m drilled & 54k soil samples over all licence area plus 8,000 follow-on drill programme across 3 targets Cheyeza = 3km + Muswema = 3km + Fwiji = 2km. RNS also states:
> Q2 2020 Follow-On drill programme
> Q2/3 Cheyeza MRE
> Q3/4 Cheyeza Scoping Study
RNS 14-Jul-20 AA Exclusivity & Confidentiality Agreements signed ... initial 6-month agreement
RNS 21-Sept-20 Scant detail on Drilling results due to AA Agreement. Fwiji 9 holes completed of 8km (announced Jun-20 RNS). ALS soil samples x2,500 results received & looks like being modelled to target more drilling BUT no details. RNS also stated that ANY results would form part of AA Technical Review.
IMHO Cheyeza East has Tier1 deposit written all over it with high grade target 3,000m x 800m and over 68 holes drilled to date showing significant mineralisation up to 100m open at depth with best grades of 18m at 2.35% Cu and 39m at 1.47% Cu ... this supports an Open Pit shell approach with grades likely to be significantly ahead of other Zambian operational mines the nearest being Sentinel 40km away at 0.48% Resource & 0.55% Reserve grades.
Also IMHO ARCM is now drilling the **** out of Cheyeza, Muswema and Fwiji so it can establish 3x separate JORC compliant resources independently ahead of any 'trade sale' so it has a strong negotiating position whether this be for a full sale or Earn-In and eventual JV. I guess we are not going to get meaningful detailed results RNS for a while, but when we do I think they will be worth the wait.
No one seems to think this is an option but maybe Anglo aren't commiting to a full takeover. A JV would be beneficial to both parties. Arc get the benefit of Anglos old data, money and the expertise of David Wood.
The plan could be to drill out a lot more of the licence to really see what's there. If Anglo then decide it would be worth a full takeover they have that option. Otherwise it could potentially be sold on to FQM, Barrick or whoever else might be interested.
Bottom line is ARCM get a better price for Reserves over Resources and/or the further along we are with PFS > DFS.
Value to AA is driven by the amount of economically retrievable ore, capital costs to build and run 1 or more mines and overall risk factors such as tax and/or political stability ... Zambia is certainly not for the faint hearted. IF there are more than 1 Tier1 deposits then economics improve very quickly especially if they are relatively co-located so processing facility can share ore feed from mines. If there is a good by-product that can help especially if it is something valuable like Cobalt.
Valuing a mining company:
https://www.valuewalk.com/wp-content/uploads/2015/06/Valuation_of_Metals_and_Mining_Companies.pdf
Thanks to @TheBasher for sharing from GWMO BB
I think it is very difficult to put a price on the deal because it will depend on how many Tier 1 deposits we have. So far NvS said multiple Tier 1s, so between 2 to 3 at least. I would want confirmation before making a guess. FQM facilities can be used I think in the short term until AA set up their own plant, or they could just expand the CSD at Kalaba.
AAL have nothing to speak of in Zambia after pulling out years ago. https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2017/tax-economic-contribution-report-2016-appendix.pdf. If they were to take on our licenses, it would involve larger agreements with nearby processing plants or go the whole nine yards and develop the whole site through a new plant-Is there enough ore there to justify the investment ?????
Do we have any information between us that would allow us to triangulate on what a fair market price Zambian Cu asset would be ignoring fact that ARCM does not own all of it, so we can compare like with like in the market? It would also be worth considering what Cu processing facilities AA have and where they are located as market value is not always same as value to the purchaser particularly if AA have nearby facilities with spare capacity or can be upgraded to take extra ore at minimal Capital cost.
Example of NCMs giant Telfer plant processing Au/Cu in Pilbara with 4 years to EOM. Along comes GGP with Havieron and recent Brecia discovery suddenly make Telfer circa $1000 AISC more like NCM Cadia Aisc of sub $300. Good GGP find but absolute game-changer for NCM Telfer economics. Understood this is not the same resources BUT processing considerations influence possible AA price and/or NvS ability to drive to a good sale price if he understand value to AA.