The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen 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.
Andrew, sorry , please ignore, the video was about Manica, not the copper dumps.
Andrew
This interview is three years old ? The court issues around ownership have only arisen this year ? Am I missing something ?
Sorry- hard rock, not garden rock, my auto-correct is out to get me at the moment.
Alao Alluvial production generally comes from river beds and surrounding terraces and I am not sure that our garden rock targets are in these areas?
As always, many more questions than answers...I guess that is what keeps it interesting!
Hello Andrew, that is one of the reasons that I also quoted CB but then I had a meeting with him and he said the large boulders couldn't be processed so were left in situ and these were the Rocks that get in the way. Then the grindings resulting from processing have to go somewhere so are spread over the area they came from. Consequently there is little benefit obtained from the alluvial works.
I guess they could drill exploration holes between scarification and tilth repatriation, but that would probably take more organisation than is actually practical?
Hello CE
Thanks for clarification.
The reason I stated that they were an enabler was because of what CB had previously said. I may have misunderstood what he meant but it seemed clear to me.
Please see his interview concerning alluvial's starting at 3.45 and ending 4.45
https://www.youtube.com/watch?v=X_MJ49CIqds
Quotes
'They are in the way so need to be cleared'
'We need to get them out the way to get on with exploration'
That should be scarrified, not sacrificed, which gives a very different perspective on the situation. LOL.
Must remember to turn off my auto correct.
I remember many people saying the same thing (including myself) some time ago but , having looked into the legal obligations needed for ongoing alluvials production, it seems this is not the case. In simplistic terms the surface is sacrificed, ground into small particles and returned to the same area it was taken from
The displaced families that made way for the work to be carried out then return to their land which is now much more cultavatable as there are far fewer rocks and boulders, so the alluvial production is actually beneficial to the indigenous population.
When I comes to it, any rubble covering hard rock excavation targets can very easily be removed (because it is not a production target) and any alluvial work done above the hard rock target just makes it easier to remove the finings that are the by-products of the refining process.
So, yes refined surface tilth is better than boulders, but not a defining factor for enabling hard rock production.
Speaking of which, I certainly hope a definitive RNS is on its way with an update on the progress with initial hard rock production.
Before Christmas would be good for shareholder's morale.
Lucky
Sorry, just seen your post. Been away. Nexus arrangement was a legacy issue going back some time. Can't remember the full details. I think we owed them some money - but had none so made the arrangement!
Nexus going doesn't mean the alluvial production is about to go south. If Sino Mk2 went then that would be more significant. Don't forget the alluvial work was not done to generate an income stream for Xtract, its what we have to do as an enabler to do the hard rock mining.
Nexus were in only for the alluvials, due to some jiggery pokery at time when they had seemingly been looking to buy the whole concession/ had carried out some proprietary work, bought(hired some equipment?) at end of the Jan days.
Thereafter a thorn in the side to an extent, but not involved in anything but the alluvials.
Andrew, as you obviously know more about xtract than I, can you explain to me what Nexus brought to the table? Also the RNS is a contract for Alluvials so are Nexus still involved with any other contracts with xtract? Cheers
Lucky
Your more negative view is a welcomed alternative perspective to those that can't see any possible down side to this. And for balance it's welcomed.
That said, the perverse 'advantage' we have with alluvial income is that its so low that if it doubles or halves it will not make a significant difference to the rerate possibility or share price - as we saw this afternoon with the RNS.
Lets say you're right and alluvial income falls. Current Alluvial income will have to fall significantly for the future net levels to be worse than the current 50% deal. I doubt that will happen. And even if it did we may be looking at a few $K a month less profit (not revenue). Here's a Brucy bonus that many may not know. We still have over $100K of unsold gold (check all RNS for quarterly figures and you'll see)
In addition, Nexus can't 'know' what the future alluvial grades will be as by definition, alluvial income is random and a lottery. Moreover, and this probably is the most important point, If it was as bad as you say then Sino MK2 would be the ones leaving. I bet they are more than happy to stay looking at the money they are making. Alluvial production is very profitable and plenty of money is being made - Just not by Xtract or Nexus!! I see it as simple as this. Its small beer for nexus so they are off to make more money somewhere else.
Any future rerate will be driven by FB. Detailed, DFS, robust, costed, known project. Copper plays are unknows which may or may not be profitable.
Good evening all, I take the RNS to be bad news!! If there was money to be made then why would they have terminated the contract??? I assume the Alluvials are bad, possible getti g worse and they are cutting away before they lose money! Maybe they have a better prodject elsewhere, who knows.
I'm starting to think CBs buying was just him trying to give confidence to the market.... Well it didn't work and I for one am starting to get a little impatient with CB and the company. I think we will not see any good news this year or next untill about Feb/March. I'm afraid all my optimism has gone and I'm now becoming sceptical. I'm losing trust now.
I still believe there is some good stuff to come but I don't think this will have a decent effect on so until the second half of next year. GLA hope this isn't followed by problems at kelengwa which is supposed to be above board!!!!!
An RNS which heavily implies that income will increase must be good news - so the RNS is good news. I say implies, as we don’t know what the future alluvial income figures will be.
However, the reason for just only one small buy after the RNS is probably because most now realise that the alluvial income is peanuts and will never be the driver for a rerate- even when that income potentially doubles ! The catalyst will be Fairbride income, not money found down the back of the sofa.
We also have the possibility that we have to pay over $100K in settlement. However, even IF that happens it will only mean that the potential extra money (from the doubling of the share agreement) is delayed a few months. So even in that worse case scenario - it isn’t that bad.
So why did nexus terminate the agreement. The alluvial income is so small beer that it isn’t worth continuing with this arrangement. They may have been waiting and hoping for production and grades to improve but they now know that’s very unlikely - so have gone.
All in all this this a positive RNS, but nowhere near as good as some would like to believe. The fact that there was just one small buy after the RNS says it all.
"Nexus have submitted a claim for an amount of US$110,128 plus interest (which amounts to US$7,341) which Xtract and Explorator Limitada disputes. Arbitration on settlement of this amount is now ongoing and an amount in excess of the claim is held in a separate bank account of Explorator to cover settlement in, the Directors' view, the unlikely award under arbitration in favour of Nexus."
Not exactly 'doom and gloom' as you put it..
A) We're being advised its unlikely they'll be awarded it.
B) An amount in excess of the claim is being held in a separate bank account - IF they are awarded it.
C) We'll be making significantly more from the alluvial project quarter to quarter a result of not being tied to Nexus (assuming results follow the current trend)
Failing to see the downside here...
Sorry to be the voice of doom and gloom but they suing XTR for over $100k. It is good that they have been given the boot and we may need to pay them off through arbitration but things have not gone so well. I reckon the lack of amazing alluvial results and led them to question the 50/50 deal and seek to cut their losses.
Explorator costs will inevitably increase with hard rock production and maybe Nexus would still be liable for half of them?
Maybe the imminent onset of hard rock operations will muddy the water, so to speak, and make the cost/benefit balance less attractive to an unwelcome third party?
Fair point Heid.. if I'm completely honest I actually missed the 'by nexus' part..
Regardless, they're still gone and it doesn't make much difference to me who decided the end the agreement, what matters is that they're not eating up our potential profits.
100% of the risk/reward from the alluvial project ongoing where we previously only had 50% under the agreement, I'm more than happy with that.
If you're looking for the reason they've 'bailed' as you put it, maybe we just became 'difficult' to work with, after all, it's our concession and our wholly owned subsidiary....
I meant to also add, I disagree with the point made that “Nexus have just been given the boot”, as the agreement was terminated by Nexus, not the other way around.
Thanks JDAU,
That is what I thought, too
As Explorator gets the same share of the gold produced, regardless of the profit/loss made by Huafei then that should mean that we are now in a position to be turning a profit at corporate level rather than just an an operating level...That can only be good news :-)
Is this a good thing or a bad thing.
Yes, we will now receive 100% of the profit, but we will now also incur 100% of the costs.
I am trying to understand the logic for Nexus to fold their hand, so to speak, if the previous deal in which they were receiving 50% profit for 50% costs was profitable.
Can anyone offer up a credible reason, if this additional 50% is profitable, why Nexus chose to bail out.
Many thanks.
... I just realised I didn't really answer the question you asked explicitly CE:
Yes, our profits/costs from the alluvial project have just doubled from a 50% share to 100%.
Considering the way in which the alluvials have progressed over the past several months (and how I'm expecting them to perform moving forwards) that's put a bloody big smile on my face!
In short: "...Xtract's net share of Explorator's share of gold revenue and costs will now be 100%"
- Nexus have just been given the boot.
Could that be the reason for CB's recent investment on the open market?