Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
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Andrew - I appreciate your analysis. Thanks. When do you think the ‘Decision to mine’ will be announced? Colin appeared to make something of Oct/Nov timeframe. Did you pick this up as well?
The 20 x 25 = 500mt which imho further confirms we are well short of 2mt con copper. For that to be the case then we would need 0.4% Cu Eq which is highly unlikely looking at assay results.
As for valuation. There are so many different variables and assumptions. So when you change a few and multiply them out the margin of error / different results are high.
For what its worth my assumptions are:
1.4mt Cu Eq (500 x 0.28%)
$8500 cu price used
0.9 GBP / USD conversion
1.5% in ground value. The 3% mentioned is usually against a much higher level of confidence of resource ie a lot measured not just implied / inferred
That comes out at 16p ($178M = £160M) with 1 billion shares in issue
Thats for RC only. We have to add on Ascot and the other areas of interest. I think circa 20p is a reasonable estimation.
If you listen to the interview from 4min 15 sec to 5mins CB does appear to be hinting that the majors know what we have and the geo phys work etc may give then confidence to attribute value to other areas that have little drilling or maybe no drilling. I guess the simple analogy would be - if you have drilled half a football pitch and found value in it, then there is a decent chance the other half would be similar. You would not value the other half the same but nor would it be valued at zero value.
A rather over simplistic analogy - but you get my point
I think CB now thinks we've done enough for the other areas to have "some" value (how much is the question) attributed to them. How much or little, value the other areas of the licence (ex RC) is attributed by the majors may significantly change the valuation.
For total buy-out, I'm looking at 15p as minimum, probably circa 20p and with a bit of luck and great negotiation skills by CB, 25p max
It’s always darker before dawn, sums it up , the next couple of months will be interesting
I did note that CB thinks it will be a 20mt x 25 years resource. Ignoring the current market situation, anyone any thoughts about its possible market value in the future ?
Thanks for posting the podcast. Good day to post given the lack of football !.
Some good bits such as where BR stands on the Lachlan Fold in relation to its competitors. Just not sure in this market it will make much difference. Colin might be experienced with rising interest rates but QT ??.
What about the scenario where Colin and team want AA discussions to start and an offer put forward from AA, the offer could be 100m/200m or more etc. At this point, the SP rises to match the valuation, allows impatient holders to exit, offer is declined, xtract raise 10million of the back of the rising SP for extra drilling and find 2 or 3 more porphyrys?
Just a thought. I would be happy with this as I am looking to get some sold and this is why im impatient, but also would love to follow the bushranger story.
This may not work due to the buy back clause fine print, which we don't know.
Andrew>>>So maybe CB is right in saying that RC is much bigger than we ever thought but not yet confirmed?
Totally agree as assays from some ‘Racecourse’ holes shown deep intersections that hit potential deeper porphyry/s under the main ore body. This is a huge plus for the economics as eventually the deeper system/s would be accessed after the open pit is depleted with only minimal cost and ongoing OpEx as all infrastructure and plant would have already been paid for. This would extend Racecourse life of mine by decades!
They would have a very good idea on deeper anomalies as the EM survey (I believe) that has been done scans down to as deep as 1.5 km
Hi lucky yes I was always hopeful that racecourse was ‘closer’ to 2mt by ‘offering’ examples of where the copper eq tonnages could potentially increase within the resource.
The effect of disposition of lower grade ore outside the high grade part of the resource when the cut off is reduced and what impact the infill drilling could have to increase the current inferred resource once (partially) upgraded.
I have also said on many occasions that the intent is to get to one of the trigger points to see what AA want to do as going forward this needs to be sold for the company to grow.
The most important thing is the eventual sale as I’m sure you will agree and this podcast has made the position clearer going forward, and shows clear intent now to take racecourse to a conceptual study for the decision to mine. The 2mt now becomes irrelevant other than overall value.
The other point that was questionable is that it does appear a buyer will acquire all of the licences together.
Good reasoning Andrew I would agree.
"why havnt you picked out the part where 2mt hasn't been hit?"
The 2 mt clearly has not been officially declared and that may explain why no updated RC model has been issued yet. As it would show we have not got 2mt confirmed.
However, CB's comment in the interview "Racecourse is much bigger than we ever expected it to be" is a strange one. Even for CB, it would be a step too far to make this statement if the resource is less than previously expected and claimed only a few months ago with his 2mt comment.
I may have got this following theory wrong and maybe I'm being too generous to CB here, but my understanding now is that CB thinks there has been enough pre work re geo phys, drilling etc that a major can see the potential of all of Bushranger and we will get additional attributed value from other areas without doing more drilling? Obviously more drilling will increase the value as the major would know exactly what they were getting.
Same point as CB has made about doing just a bit of drilling at Ascot to show that there is something of interests there which has value.
CB said in that interview that we would of get to 2mt if we did more drilling so he may take the view the major will also believe this (from work and evidence already done) so no need to spend more time and money in phase 3. Obviously the value we get would be higher against confirmed resource than a " good chance" of additional resource / 2mt.
So maybe CB is right in saying that RC is much bigger than we ever thought but not yet confirmed? And now is looking for a valuation based on what we know is there + highly likely other potential value - which CB is sure will see a valuation by majors of or higher than a confirmed 2mt?
That's my gut feeling on what his strategy is now from that interview. I may well be wrong, or if I'm correct, it could be silly and risky strategy for CB to follow re maximising value. But that's my understanding of what he intends to do now to ensure we come to a conclusion on this project sooner than later.
Howezap, why havnt you picked out the part where 2mt hasn't been hit?
A reiteration overall ;-) but with some Interesting comments,
“Racecourse is much bigger than we ever expected it to be”
?
“Decided not to go chasing those huge targets”
Really want to see them survey results!
Confirms some of the resource will be indicated as has been discussed here.
Biggest revelation is there doesn’t seem to be any likelihood of a third phase.
Commented once again about an October November turn, he sounds hopeful or even set on things happening with AA before end of Q4
"Pouring gold every 12 days at 8 kg to 12 kg at FB"
Assume 9kg - that's 22.5 kg a month
May take until Jan / Feb to be fully up to commercial capacity?
I think we should get some figures by end of year though? That's my view not what CB said.
Also of note, alluvials end date circa April 23 to Oct 23.
I think some significant statements there. No Phase III drilling. resource model in prep with decision to mine to come along with that. Early reticence to state timescales but a later off the cuff reference to late Oct/Nov. It also sounds like when results get issued (must be this week?) they will not be disappointing. The candid discussion of missing earlier stated date targets, and the general stuff about the disconnect between the company's apparent prospects and the cold reality of the market cap was also very interesting.
Not so much an interview but more a monologue :)
As usual, it all sounded wonderful! Lets hope it all plays out as implied.....
My gut feeling from listening to that, is that RC model wont be released this year . I think he said " not too long now" so in CB speak that usually means over 3 months.
If he said imminently then that would have meant this year imho.
I remember Colin doing a seemingly pointless interview way back in feb that was just to reiterate the targets that were set! Actually, in hindsight that really was a pointless interview lol, but showed his good intentions in consideration of shareholders at the time at least.
Throw the dog a bone please Colin ;-)
Kevin Hornsby just stated on Telegram that podcast will be out at 12 today
The Roast interview is going out today 12 noon, not Monday according to Kevin Hornsby. Stated this yesterday late PM
Yes, CB is limited in what he can say without RNS, but he can give some pointers on timescale ie when first FB income will be declared, when Q2 results out and when RC model will be released.
So plenty of interest that he can still say.
The issue for me is, can we believe any of it !
A reminder regarding the rules of The Alternative Investment Market... There are No Rules (from a real world perspective anyway)
The Roast guys have confirmed that they interviewed Colin on Friday. With the interview going out ‘probably Monday’. Can they have sight, under an NDA, of an RNS pre release (for Monday?). Otherwise, if their interview with Colin Friday was limited to what has already been announced, I can’t see the point of it - as surely there won’t be anything really worth discussing until after the next RNS?
I took a quick look at RNS releases from this time last year and a bit of a surprise for me was the sequence of releases:
1. 30 Sep 2021- half year report for Xtract company for the 6 months to 30 June 2021
2. 05 Oct 2021 - Q2 Moz gold results for the quarter ending 30 June
3. 14 Oct 2021 - Q3 Moz gold results for the quarter ending 30 Sept.
I am wondering if this pattern will be repeated ....
Looking at copper prices, we are at about 70.5% of the peak in dollars, but at about 81.8% of peak in pounds Stirling (comparisons with approx 4th April based on info from livecharts).
A very bearish day for copper and sterling and good to see XTR has not sunk any further. The majors with cash could see this as an opportune moment to pick up assets cheaply. I agree with the view expressed here that the recession can only delay the copper supply crunch by a year or two. So I have started buying XTR again. If only somebody would assassinate the murderous thug in the Kremlin
The way I see things panning out is that another programme of exploration will take place which will primarily define the near surface resource at RC and I imagine a handful of holes into RC to extend areas of inferred resources into the indicated category or simply to plug a hole or two in the data. There will be more holes to further define Ascot but include a few wild-cat holes into anomalies noted in the IP survey. This will likely end next spring (a year later than planned but I'm not complaining if it means increased profitability). Then it's hammer time! Despite many predictions that Cu will be at a near term low in the spring (prior to an extended run up in price) CB will need to sell this package on. I can only hope that the majors will take into account the anticipated long term price of Cu when they evaluate the value of this asset.
The other possibility is that XTR could sit on the resource until the price of Cu appreciated to a value more indicative of its future demand. This would of course mean that the resource could be further drilled out 'in slow time' to improve the resources JORC standing and consequently its value. I realise there are probably not many here who would want that approach but the other option is to sell at the bottom of the recent Cu price cycle. I can only imagine that a major miner would use that to drive down the price. Time will tell.