George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
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The JORC resource is looking to be in the region of 800MT+ with 1.5 to 1.6Mt of copper after infill and any further extensions with a pre feasibility study that will then show a ‘realistic’ economic study. It will be black and white as CB’s reputation becomes quite irrelevant when this point is reached.
The lower bulk grades that make up the majority of the resource can not be ignored. It will be these that extend mine life beyond the 20 years that the big miners want. The original conceptual study established that, the then current 71mt defined resource could deliver a positive NPV return at a 0.15% Cu cut-off with at a rate of 20Mt per year at a copper price of US$5 per lb.
It concluded that the >>Racecourse deposit contains significant low-grade tonnes of copper and gold which may be economically recovered at a copper sales price above US$4 per lb<<
Phase 2 delivered more than what was asked from that study to ‘increase’ economic viability by increasing the size of the resource.
It should be a big viable resource, how could it not be? Since then, stripping ratio will reduce, due to converting waste rock into ore, high and efficient recovery rate from metallurgy samples, and copper looking to rise further into the year that all have a positive effect on lower cut off grades.
I would certainly believe it will attract a far greater value than 10p per share!
Maybe by that he meant stick it in the Xtr bank account quicker than a flying Bird, Gixxer ?
Fair enough Andrew, but not to be always agreeing with you, I'll go with less than £50M gbp for a Bushranger sale I would consider a disappointment.
( my learnings from a long time here is expect a lot less than the average of the participants on this BB would have me expect.. and I'm going to guess you're around the average in that 100m gbp comment .. note that I'm not just including the Bush bulls in that, I'm including the Bush bears too.. and for plenty of them CB's reputation is earlyish down the road tatters already, in fairness.. I'm not an Bush bear, but I'm only somewhat bullish more than strongly so)
If AA do not make an offer then I can see us using the African money to conduct further drilling to pad out the resource to something AA, or A N other, are interested in.
However, I think that although AA may think the resource is currently 'below spec' they also know that a resource like BR is potentially very valuable (especially in the near future) and it's other attributes (primality location and the numerous benefits that stem from that) are second to none. I can imagine they may well want to keep a toe in the door and may offer some sort of limited JV (funding possibly) to allow XTR to continue exploration on the basis the AA get first dibs (again) with some sort of sweetener (for them) should a suitable amount of Cu be found.
Just musing....
And don't forget - Bird himself is on record saying he'd 'tell em where to stick it' if AA offered 10p!
NtM
If we sell Bushranger for less than £100M (10p equivalent fully diluted) I would consider that a disappointment. Against very pessimistic assumptions just the 0.6mt near surface higher grade Cu should be worth 6p min probably 8p
After all CB has said over the last 2 years, If we got less than 5p for it then I would think CB's reputation would be in tatters.
Not even he could spin that result !
Much appreciated on the FB income calculations here, especially Andrew... impressive analysis.. and while I have to downgrade my expectatons - to the extent of somewhere between a bit and somewhat - off the back, I now think it's reasonable to do so.. and so I now agree with Andrews view (because of the good analysis and it including allowance for CB's long history of over promising too)
Re Bushranger.. I am confident it will be sold - edging towards very confident even - before 2025.. and my latest guess on the sale price for it is somewhere in the 10m to 100m gbp range .. quite a wide range to give myself good bandwidth :-) .. so being a little more range specific I 'd go 15m to 75m gbp.. and that's as range specific as I'd get at this time
Gf and BE income may get us to 3p but I'm not expecting any other income streams for some time - thats assuming there will be anymore.
CB has all but confirmed there will limited drill at Bushranger, after the model done, so I would think all this income will be used to undertake the additional infill drilling. Any significant sp appreciation will all be down to Bushranger and the anticipation of the sale / or actual sale.
If Bushranger is a dud and no one wants to buy it - I don't expect that to be the case at all - then its hard to see how sp will go much higher than 3p against current assets.
I'm very confident Bushranger will be sold for a substantial amount, even if we have to wait 18 months for POC to reach a certain level.
I was thinking similar 2-3p. Better than where we are I suppose but the reality is Manica as a whole will under deliver what we were led to believe. We will just have to hope that the BR study contributes a little more to the future SP.
The alluvials are ramping down and the other small HR deposits only give us around 13% so not sure where any other significant income will come from tbh. Does anyone know what is expected from Zambia ?
So circa 2.5p is just for FB contribution to the pot?
More to come
"So how will circa £4m per year for 5-7 years translate into a SP"
If you assume £0.35M a month with a PE of 5 that would be £21M over current share issue of 856M = circa 2.5p
A4444 I agree with that. So how will circa £4m per year for 5-7 years translate into a SP ? Not much uplift probably but maybe someone could share their thoughts ?
Further to the discussion re FB income.
Using a more consensus view, and some may say more realistic, if you look at two upper and low case scenarios we get (imho) a reasonable idea of what to expect.
Assuming margin is 40% (most seem to agree) and we get 23% of that:
Pessimistic view:
POG $1700
65KG month
That works out at $328K a month = £270K a month net to xtract after all tax and costs
Optimistic view:
POG $2000
100KG month
That works out at $592K a month = £485K a month net to xtract after all tax and costs
Average of the two upper and lower bands is £375K a month
I think circa £350K a month (+ or - £50K) is a very realistic assumption on level of income from FB when we are at full production - probably some time in Q2
London metal exchange has finally seen inventories reduce from just below 5 days to support global demand where it has sat for some time , as the demand over supply is starting to squeeze.
Copper futures eased slightly to $4.1 per pound after touching a seven-month high of $4.2 on January 13th as concerns surrounding lower global growth halted the rally triggered by China’s economic reopening. Still, copper prices have remained more than 9% higher since the start of the year after major industry players warned that worldwide production would be unable to keep up with higher demand as modern economies transition to copper-dependent renewable energy sources. Disruptions to mining activity in Peru heightened shortage worries, while top producer Chile forecasted its output to contract by nearly 6% in 2023. Inventories at the LME and SHFE warehouses fell to under 186.4 thousand tonnes, enough to support global consumption for just over two days.
* tradingeconomics.com
Andrew, you are wasting your time. She has been told many times why her figures are nonsense but she simply comes back with the same figures.
I sometimes think she's just on a windup..
"So Colin being economical with the truth or telling porkies??"
Fair point. When has CB ever been economical with the truth in an interview :)
"Anyway, it really doesn't matter as results will speak louder than words."
I think we can agree on this point so lets leave it there and wait and see what the actual results are....And when I say results I mean PROFIT after tax not revenue before tax and operating costs !
Buona notte e dormi bene !
"We are nearly on the same page I hope?"
Unfortunately, no not on the same page. In fact not even the same book :)
You said:
"So guys there you have it. Colin is saying we will get between 23kg to 30kg a month against costs of £40k to £50k per month - these costs are already in place for the Alluvials plus small open pit and hard rock operations."
As has been said by others many times before, you are mixing up different agreements. Alluvials, small hard rock and FB are all under completely different arrangements.
You said:
POC per KG is $61750
23 kg is $1,420,250
30kg is $1,852,500
Per month
At a cost to XTR of £50k per month.
Your $1.42m income a month for 23kg a month to xtract is correct, but the costs are not £50K a month (I assuming you meant $50K a month but thats not the main error)
CB has made it clear we get 23% of PROFIT not income. He has said many times that the FB margin will be 40 to 45 %.
He has give indication of costs in another earlier interview:
Assuming POG 1800
Production tax (6%) 108
Direct cash costs (CB said 560 official but call it 600) 600
Prod tax + Direct cash costs 708
Tax (32%) (32% of profit) 350
Net Profit per ounce 742
Margin % 41
These may change but it supports his previous comment of 40 to 45% margin
In addition, CB held a chat room discussion in July 2020 which he answered questions. Below is a copy and paste of his actual reply. Words he typed.
07-18 10:25
Xtract Resources Plc - Colin Bird:
Hello David, we do not sell gold locally. The gold is sent off shore with a contracted refinery which passes international regulatory scrutiny. ....... The Fair Bride hard rock operation will be the same guaranteeing good prices relative to the current gold price. We get 23% of revenue less direct operating cost so if the project does 100kg per month at a margin of say 40% we get 23% of the marginal contribution.
So yet again, CB refers to 40% margin, as he has done before in previous interviews that James referenced. Why would CB keep referencing 40% margin if the margin was so much more than that. It would have to be much higher if your figures are correct. Why does the calcs above come out as 41% using CB tax and cost figures? Coincidence?
From FB we will be getting 23% of a circa 40% margin ie we will be getting just over 9% of total production. 9% being FCF so after all tax and costs.
At 23kg a month that is $1.420M but we will be getting 40% of that so $568K = £471K to Xtract assuming 100kg a month production
It will probably be more like 75kg as CB is overly optimistic. 75KG a month would give xtract £350K a month clear profit and this is more realistic. Assume £300K to £400K a month profit a month from FB.
I belive Any mills and James has said the same thing to you a few times before. Even shown you the actual RNS agreement
Dani, you are mixing up three different arrangements in one and ignoring production costs for FB. S
Dani - I said something different.
29000 TONNES per month = processing capacity for commercial production.
42000 TONNES per month = nameplate capacity
My expected grade is 1.8 g/t you could assume a higher number if you believe appropriate.
I disagree with using the interviews in this manner as unfortunately imho Colin has not been as clear as he could have been.
Bottom line for me as the statement of truth is the RNS https://xtractresources.com/investors/rns/manica-hard-rock-collaboration-agreement/ and not what Colin said in an interview.
And the RNS statements are illustrated by company statement in this presentation on slide 8 which is pretty much forward revenue and profit guidance
https://xtractresources.com/wp-content/uploads/Xtract-presentation-July-2020.pdf
To get to the cashflow figure stated on slide 8 means operating costs are c$550 per oz. This is way more than the costs of the Xtract team on the ground if you use the 30,000 oz p.a. in the presentation then the annual costs are $16.5M and these costs are deducted before Xtract get their 23%.
James kindly shared a calculation which I think is self explanatory.
1300*94% = 1,222 (assumed POG at date of presentation less 6% production tax)
1,222-550 = 672 (deduct operating costs taken from DFS)
662 * 68% = 457 (net operating profit after tax at 32%)
457 * 30,000 = 13.7m (net operating profit x ounces produced per annum)
13.7m * 23% = 3.15m (net profit with XTR share at 23%)
3.15 * 7 years = 22m pretty much reconciles to the presentation
Clearly there is a significant tail wind to benefit XTR with the POG being close to 50% higher but the mechanics of calculating the XTR share are as above but I would increase the $550 per oz to reflect 3 years of inflation.
I will take 42
(that is LOM or SP ... either will do)
So it's told me the answer is 42 ...
Shame there's no student version (Most companies used to do that back in my uni days) I'd quite like a crack at it...
If anyone wants to 'geek out'. How to design an open pit using the software Optimal use:
https://www.deswik.com/product-detail/deswik-cad/
https://www.youtube.com/watch?v=dS_b6XLw2Xw&ab_channel=SmartMinero
Or alternatively use stevemocals tried and trusted beer mat method of quantifying
Seems a lot of faffing about and overcomplicating a straight forward task tbh.
Couldnt they just ask Steve to do this with his spreadsheet??
He manged to do all that on his kitchen table over a weekend :)
Thanks gixxer, very interesting.