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#Copper pushes higher as investors bet on economic recovery
Citigroup says the metal's rally will extend through June on a continued rebound in Chinese demand, driven by stronger credit & government easing measures
#MTR $SFR $CBE #KML
Posting of Annual Report and Notice of AGM
Copper flying>> UP >>2.47%<<>>Now >>2.551
Tshukudu Metals Botswana (TMB), has resumed its operations.
#MTR $SFR #Chargingahead #Miningbotswana
25 May 2020
Tshukudu Exploration Update
Hydrogen, in my experience many Investment Banks will not want their name published and make it a condition of the ISDA that it is not divulged.
Looks helpful to me.. hedging risks. Just wondered - Why do they appear to be being secretive about which global investment bank they are working with? Is it because that weakens their hand in negotiations or something?
Morning Keith, important for accessing derivatives for hedging purposes and managing currency risk. It will allow MTR to take positions on commodities and futures for trading purposes. An important step.
Good morning folks. What's to be made of the RNS? Is the company up to anything specific or is it just a sign of growing up?
Martin C Holland
Cu to take centre stage throughout 2nd half of 2020 as the so called Chinese new infrastructure” and “new urbanization” spend balloons - whilst $CBE drill rigs arrive onsite this weekend
Three routes to mining value---- Mining- Journal
Sandfire Resources, Asiamet Resources and Emmerson Resources offer three contrasting approaches in the search for value in an industry unsure about the best model for delivering investment returns.
Many thanks - that's really helpful Doc. I've been struggling to properly get my head around this bit of the story... And it's clearly a massive piece of the jigsaw. ATB H
I think the announcement by SFR that they are going to put 20m AUD just into A4 area, shows how much drilling and money they are going to plow into this area.
They will match this on other areas I would say 60m aud dollars over the next 3 years (all of this will be paid for by SFR but the results will all add to the NSR).
I would envisage they would give a large driller contact due to the amount that needs doing.
80-100,000m of holes with that= 200-300 holes depending on depth.
Most of this is our NSR area. Let’s say 75%
Amazing that this amount will be ploughed into ground that MTR will spend £0 on It
A4 also has deeper structures that will need drilling but will add to tonnage. This will come after open pit.
So when trying to value this for MTR (and what MTR is worth) it’s important to understand how much money that will be ploughed into the area -drilling and EM and geochem
A4 has more than the surface results so far and although that won’t show until drilled out after open pit, the NSR will keep giving for so many years to come.
So then the question will be but we won’t see that until production.
It is quite clear as this develops MTR will be able to lend against this , so no need to sell but leverage off and pay dividends
I will repeat a post I put up a while ago. When looking at the price you need Cu plus silver I have used a blended price Cu/silver of 7000usd/t
My post a while back:
So let’s assume the A4 deposit is the same size as T3. Currently Argonaut note say just on holes we have so far it looks 180kt contained Cu. From EM and new zone found however, and the fact we are dealing with higher grade Cu just the A4 area looks like it will be 2-3x bigger than T3.
T3 conservative reserves ( not inferred resources ) are about 350kt of contained Cu. That will change if SFR has been upgrading resource in time to review the DFS.
So let’s say 7000USD/t for the Cu and silver blend
350kt * 7000 = 2,450,000,000 usd
USD 46,550,000 to MTR on equivalent to T3 resource.
Multiples as bigger.
Now there are some costs that have to come off for the final NSR figure- transportation, insurance etc but you get the general picture.
Depends on how deep your convictions are. To make the big profits you need to have the discipline and conviction to let your decisions run. I always get annoyed at myself when I do all the research and then take a small profit to see the SP run away after because I was nervous, even though it was exactly what I expected. Unless I have something better to buy I generally don't sell a stock that is an uptrend like we are now. You will see corrections like the small one we are witnessing now but the trend is your friend, it truly is.
But if you are extremely nervous then best bet is to sell some. It will probably make you feel less anxious if you bank something. Or set a stop loss to allow for a reasonable healthy correction, say 2.10 for MTR
Many thanks for the replies. Very helpful indeed Ragnarlothbrok. Working up the maths and economics of this stuff is not my area, (but I do love to have a go). I'm also getting anxious, simply because I've been signicantly underwater for so long that I'm i'm finally in profit here and don't know what to do! I was 12k up the other day thinking christ alive... do I sell? I had to check myself! I have supreme confidence in this company. Having sat here patiently, for so long, selling anything would be well, clearly absurd. H
Hi Hydrogen, my thoughts about the calculation for the NSR:
NSR = (Annual production x Ave price, less TC/RC, freight, insurance etc) x 0.02 (ignoring by products credits)
For example, if the royalty were over T3 where annual production is 30kt for 10 years, the current price is $5,500/t and the TC/RC/freight/insurance etc (guess) is $500/t then the NSR would be $3m per annum. To determine the value of this, apply a pre-tax discount rate (lets say 10%) over a 10 year mine life. Based on these assumptions I get a valuation of $26m.
However the other tenements could be much larger, so say annual production of 60kt per annum gives you double that at $6m p.a. for a $52m valuation. I think that $9m p.a. is stretching it, implying 90kt incremental production per year (120ktpa including T3).
I believe the recent run up reflects the huge amount that SFR is planning to spend on the A4 drilling, combined with the promising initial results, leading to expectations for a big resource at A4. Defining the resource will go a long way in establishing the most important parameter in the above calculation and then working out the value. At this point its a lot of speculation and guessing.
Should of stuck to my gut
Tigers as I think this is a little overdone with the SP ! I agree with you Hydro on your broad figures but I’m reasonably certain that investors like me and BigMJ Etc are looking at a much bigger picture. As prudent as it is all liquid investments are sitting at nil upside value and the uncapped NSR”s are possibly a huge income stream which can be collared, mortgaged etc for some hefty poppy. With that resource estimate confirmed the SP of SFR and ourselves should hopefully increase dramatically. SFR is trading at a huge discount currently as we all know; the divis will increase as well giving MTR larger mortgageable revenues.
CBE SAU PAM KML are all at nil value save liquid investment price; prudent yes but real ? Obviously all the LTH”s here think as I do; they are going to be worth some real dough hopefully in the not too distant future particularly in relation to CBE.
So yes to your figures Hydro current position I think is about right; 9.45M over 10-11 years you can get a lot of loan/mortgage on that Tigers !!
Sorry I below I didn't make clear that T3 NSR is capped at $2m US. But I wanted to work is up from T3 to extrapolate to A4 assuming A4 is a 15% larger deposit. Anyhow you get the picture.
Sandfire's T3 Project hosts a current MRE of 60.2 million tonnes grading 1.0% copper and 14.0g/t silver for 590,400 tonnes of contained copper and 26.9 million ounces of contained silver (from Sandfire's website). According to Sandfire's CEO A4 looks like it "has more ore, at higher grades", and they are still looking for the edges. The 590Kt of T3 copper resource (@ $5,621/t for the CU - SP global price) T3 is a $3.3b resource value. I'm estimating a total all in cost of extraction - ie mine build and operation - at 30% of its overall value, for the purposes of this exercise because it's part open cut + part underground. In reality it's probably closer to $700m. Cupric canyon spent $650 building out their mine. Thus T3 is a c$2.2bn resource after costs (whist ignoring the silver credits worth $390m at $5/oz). MTR will get 2% NSR over the life of the mine. Plus then there's the A4, which is even bigger, as stated last week by SFR at higher grade. Let's say for this purpose it's just c15% bigger. So that's c670 Kt at $5,621/t = $3.7b CU resource value (ignoring the significant silver credits at say $400m). Take away 20% ($700m) for the cost of construction of A4 and extraction (I've reduced this to 20% because A4 will share infrastructure with T3) that's circa $3B value on A4
So $3bn for A4 and $2.2bn for T3 = $5.22bn. (with the possibility of being up an extra $0.8bn, so total of $6bn, further upside, if we do include the silver) MTR get 2% of this as NSR over the life of the mine. As i've said, no silver, to be conservative and for the simple reason that it allows for a significant margin of cost safety in these calcs: For example future government taxes, social infrastructure payments or whatever unknown operational costs SFR incur through operation. Cupric Canyon's Khoemacau copper project next door has budget/cost for mine construction of $650m to date and they're now (almost) in production.
So 2% of $5.2bn is $104,000,000 or £84m net to MTR, over mine life, as a conservative figure. MTR current Mcap £35m (but £23m assigned separate in liquid assets).
Thus approximately £12m value is currently attributed to MTR's NSR and SFR dividend, plus our 100% proven Kalahari exploration portfolio (which we know, if we know from the Sandfire/MOD acquisition were to hit another commercial Copper dome would be worth circa $50m, and probably more.
If the mine life is 11 years that's a conservative annual income of $9.45m for 11 years. That funds a lot of drilling / investment!
It must be possible to add roughly 50% of the value of the NSR (ie £44m) to MTR's Mcap, once A4 defined. I would say we have at least 100-150% upside in the very near future. However add in future exploration successes, in a proven copper jurisdiction, plus the uncapped NSR with SFR a $5bn mining company driving this forward makes some seriously powerful economics. Like 500% -1000% upside in 5 years.
BigMJ et al, what do you think
sorry KML not KHM obvs.
It's comparable to GGP - when you've got a cashed up company driving the project forward... value will be realised quickly.
KML could be blue sky obviously. But our bread n butter revenue growth is clear to see. I think the numbers are looking very tidy now given the assets... I reckon ballpark income will be circa $10m annually from the NSR at T3 and A4... (calcs to follow and would appreciate feedback) .
And £23m in relatively liquid assets many of which could double or triple in the near future.
And if Sandfire or KHM hit big copper again... Rocket suits at the ready.
There were two 750,000 purchases yesterday ! It’s imminent (mega news IMO) and I understand people taking profits hence the slight retrace on the SP.
Once that resource is priced up, happy days. When you mortgage, collar, sell a forward generating income stream over a long period that will generate the necessary lump sum to then become a fearsome player that will naturally attract new business because everybody will know we have the poppy to invest and crucially, a BOD who are experienced and trustworthy. Seriously Tigers, what’s not to like ?
Agreed Vectran, I do not agree. KML is the icing on the cake. The real hidden value are the SFR licences, A4 etc..... KML will take time to prove up.
Agreed - sorry if it wasn't clear below the valuation was of 'investments excluding royalties' [i.e. the KML project].
You could either value KML at cost (~£3m), implied value at last capital raise (~£5m - May 2019 valuation), value based on recent transaction (i.e. the MOD/Tshukudu transaction at ~£2100/km2 which would give a value of ~£9m), a convoluted DCF based on expected volumes/prices etc. etc.
I don't think cost is the most reasonable basis to value it on.
My main point was that KML is a key unknown and a key driver in potential valuation upside from here.
I don’t think you can just count KML as zero value . Therefore it should be added at cost at this point.