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I assume (possibly incorrectly) that the blue dots include phase 1 drill locations? Is there something significant in the fact that there appears to be a 3rd hole being drilled from the location of previous holes 5/6 *or (4/5)?
Who knows what will click the market? :)
The open pit plan adds value, but it's probably just a structure that the drills will hang off, hopefully some good drill results will see value.
Discount to npv is xxx of the value so a 20% discount of an npv8 of 100m is 20m, so you would value it at 20m.
The discount is risk specific. I.e a pfs in Canada might have a 25% discount, a pfs in s.Africa a 15% discount, a pfs in Aussie 30%. But the size of capex, how many different minerals, lom, will all impact the npv as well.
@theiceberg
Excellent post and blog on the data we now have.
You said...
"...Phase 2 drilling will add much more. All of the mineralisation will be free, as the material will need to be extracted regardless as it lies within the open pit design, it will directly increase the NPV and bring the copper breakeven price down. It is therefore a reasonable conclusion that the added material, higher grade mineralisation and further refining of the design and capex requirements will bring the copper price break even down to around $3.6 lb, with an NPV of 1.3bn with copper prices at between $4.6 and $5.
This alone would be a fantastic achievement, creating a profitable and desirable mine, however, the expectation is that considerably more mineralisation exists outside the open pit design..."
My layman's take is that these potential sets of criteria you mention are the single biggest evolving impact on share price - the market starts to realise that from a bold base line model statement - so much data over the next 6-9 months will further confirm: initial economic viability, LOM, overall profitability, BUT with ongoing increasing scale being proven-up.
I suppose my question is what is the trigger for the SP to accelerate / re-rate ? (remembering this is a speculative investment not a mining investment)...
--> a revised jorc ?
--> Cu price to surge ?
--> large additional location discovery ?
Clearly the objective here is to prove a mining potential, the AAL clause is something that might come off or not.(interestingly in the ZM presentation the AAL potential quite rightly at this stage was not even mentioned).
IMO ATB Shorn
Iceberg - Have you included Footrot in your secondary targets (SE)?
As always, the sharing of your insight is massively appreciated.
Read this article, it's very informative.
https://insights.csaglobal.com/market-value-doesnt-match-npv/
Yes thats what I have done over and over. I get the SP to be several times greater than what it is now and yet the market hasn't shifted at all. Are we really in at the basement level or have we missed something...
My understanding is you take off the discount from the NPV and that amount is the purchase price.
So to have a finger in air assessment of sp then x NPV figures at end of Iceberg blog by 0.8 (IF it is 20% discount) and then x by 0.53 to convert to £ from A$.
As we have 1B fully diluted shares you divide this amount by 1b and get the sp.
That's my understanding. Happy to be corrected. Discount may not be 20% though.
I'm confused now... well more confused than I usually am :-) ... are we saying 20% discount to NPV is that someone may pay us 20% of NPV or that they will pay 80% of NPV ( ie the NPV but at a 20% discount). That seems too high ? I can sort of get that we could receive 20% of NPV / I still dont understand how all this gets to lift the SP (as at the end of the day thats all that counts) ?
This may not be relevant as I may be comparing apples with oranges, but the Manica Hard Rock option to purchase had a discount of 20% ie 80% of NPV
Option to purchase the concession
The Company has granted MMP an option to purchase the Fairbride concession, subject to all parties receiving necessary regulatory approvals including, but not limited to, the Company obtaining shareholder approval, for an amount equal to the greater of:
· An amount equal to 80% of the net present value using a discount rate of 15%; or
· US$20 million
https://www.lse.co.uk/rns/XTR/manica-hard-rock-collaboration-agreement-ghoo8qdt7s68ji6.html
Good Point Iceberg..... I dont think they really mentioned the large extrusion to the east at all..... most mention was given to the NorthWest and South East, where they had overlaid their planned drills. (If the planned drills shown in orange only represent the 8000m of the currently approved drilling, then perhaps they will tackle the eastern promise in the next batch).
Looking back over the IP scans from the last presentation and RNS and that area to the east looks as big (plan view) as the areas discussed in yesterdays podcast.
I cant wait until september when we start getting assay results back .....exciting times again.
I had a section for this, but took it out as I wasn't confident. Maybe 20% discount to npv 8. But it depends on confidence, jorc etc.
This brings a lot of clarity to the potential that Xtract has. Thank you Iceberg. I’ve been building a holding here since March, and I’m here until this plays out.
Grateful if you’d help further. There is clearly a large range on the potential NPV, depending upon what the next phase(s) of drilling reveals. For the sake of argument, let’s say the NPV ends up at Aus$ 1bn. What would this translate into in share price? I have no idea what would be reasonable to discount the NPV by, to allow for the risk ( and opportunity cost) that a major would have to stump up to develop the pit/ mine.
Thank you in advance.
Very good Well Done, had a read through
F100
https://icebergshares.blogspot.com/2021/07/xtr-xtracts-bushrangers-first-class.html
I've tried to put a few thoughts, many of which are self explanatory and known into a blog. Hope it helps anybody. Also the bottom table which hopefully adds some context (figures my own).
Cheers