We chatted to IronRidge Resources' CEO Vincent Mascolo who explains why the company has become a lithium explorer. Watch the video here.
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Xtract Resources is the old Xtract Energy that Executive Chairman Colin Bird rescued back in 2013 and set on a new course. The early acquisition of a Chilean gold mine failed to meet expectations but the Manica Gold mining licence in Mozambique looks to be coming good. The company has been benefiting from a growing profit share from the alluvial gold on its licence area in a neat deal where other parties fund the necessary capex.
Growing profit share from Manica alluvials and hard rock gold mining
Profit share from Manica has been growing steadily for a couple of years now but it is about to step up a gear. The same sort of model is being employed at the Fair Bride hard rock deposit where a 35,000oz pa gold operation is set to begin before the year-end. Here, Omnia is providing the $6-8 million necessary capex and Xtract will get 23% of revenue after costs.
On course for £12.5m share of annual mining profits within 12 months
More similar profit-sharing deals are about to come to fruition at Eureka (copper & gold) and Kalenga (copper), dramatically transforming Xtract’s fortunes. The board has worked hard on these deals for a while, but it does seem that all the trains are about to arrive at the station at the same time.
Blue-sky projects include Bushranger in the hot Lachland Fold Belt
This area in New South Wales is Australia’s world-class copper-gold province and elephant country. Here, Xtract has just acquired an open ended JORC resource of 350,000t of contained copper in quite a coup. ASX listed explorers with interests here have recently seen big re-ratings.
Big disconnect in the share price as our valuation shows 480%+ upside
We believe our valuation is conservative and initiate coverage of Xtract with a target price of 6.56p and a Conviction Buy stance.
Pyo88, posted on the subject on January28 trying to get a sub 1p buying..I guess the same happening 10 months down the line..maybe not the same peep but same agenda. Pyo88 unfortunately bought more around 1.5p on the recent SP collapse.
CB has discussed this several times in the past. Xtract had carried out due diligence with authorities and are content they are working with the legal owners.
If you check the link you will find it has been removed. (I did read it when it was up and it was the same as the other 'articles' attacking the current owners.)
Anyone read the latest post on Advfn. Any thoughts anyone ?
Moving on from Manica, how soon can the latest policing cash kick off the Zambian copper,can we expect any income generation near term from the tailings
I think we are talking at cross-purposes and confusing each other.
I agree with nearly everything you have just said but I think you have also missed the point I was making.
As an aside - My only slight disagreement is that it’s impossible to come up with an accurate revised figure unless we know what the actual grades will be. Targeting higher grades doesn’t tell us what they will be.
I think best leave it there and wait and see what the actual income figures are.
You seem to have completely missed my point, which is very unlike you.
The point I was making is that the site contractors have complete control over XTR income from Manica. CB can only give forward guidance based on what he is told by the contractors and they can change their minds at any time, resulting in CB having to revise the forward guidance accordingly. Trying to pretend that CB has more influence than he actually has is misleading, as too is trying to blame him for changing forward guidance.
Incidentally, CB did state publicly on a podcast that GF production would concentrate on the high grade veins, so anybody that was interested could have done the maths to come up with a revised forecast for XTR income, all based entirely on information already in the public sector.
CB can sack the contractors he has appointed if they ultimately fail to meet their contractual commitments, although he would need to have a better alternative in his back pocket in order to dodge the inevitable bullets heading his way. Until then, I am not sure what good it will do to shoot the messenger, as that is mainly what CB will be whilst the contractors are managing the projects.
Does there not have to be confusion in the first place ?... for it to be compounded ? The blame lies squarely with Bird for shareholders having to speculate on the well being of their investment.
As I previously stated in another post, we only know what we have been told officially (you may know more from your conversations with CB) . it’s one thing the contractors chasing the higher grades but that doesn’t mean they will find them.
Further, In the mine prophets chat room CB mentioned the new alluvial Mk2 income and he said it was going to be ‘modest’ - his word.
I really hope we do get income of $200K a month, but I stand by my comment that the $200K prediction is more than what has been previously implied – at least compared to info from official channels.
You cautioned about ‘unrealistic expectations’ and the danger of shareholders compounding this. I can’t agree more and that is exactly why I am being conservative with my expectations.
To this end, I’m predicting £100K to $150K monthly income by end of year from GF + BE + alluvial Mk2 income. If the $200K prediction is correct, just from just GF + alluvial Mk2, then my estimate will be easily exceeded - and I hope it is.
It will be interesting to see what the actual figures are come end of the year and if my rather conservative approach has proved to be more realistic.
Early predictions of income for XTR were based on average grades of gold, however the contractors strategy of chasing the high grade veins with little waste and ignoring the lower grade areas has resulted in expectations of 3g - 4g of gold per tonne and therefore higher short term monthly income to XTR. I guess it makes sense from the contractors point of view to maximise their ROI - and it is pretty good for us, too.
It is up to the contractor on site to decide its strategy and XTR can only revise expectations in line with this . If the contractor decided to target the low grade areas first then there would be nothing we could do about it and monthly income to XTR would have to be revised downwards to around $40K per month - luckily that is not the case and therefore something like $200,000 per month is the current expectation.
I am looking forward to getting the update on FairBride next week, or possibly the week after if the contractor drags its feet...
Assuming that XTR has undue influence over the day to day actions of site contractors once they have taken control of production can be misleading and could result in unrealistic expectations. CB does enough of this as it is, without shareholders compounding the confusion...
Let's hope that the contractor plays ball when CB asks for an update.
Buying time to word what he knows will be less than positive news... or buying time to conjure up some better news to cushion bad ?
I agree NtM, the CEOshould know this already...sad state of affairs if this has only just occured to him ,a bit gob smacked with this statement to be honest
Much appreciated on your feedback here CE, not least yesterdays call with Mr CB
I took some good and some bad from that call update and, altogether, was tempted to sell down a third of my current bet here in the hope of buying it back lower in due course ..but went for 15 % sell down only in the end, as the s/p has fallen a lot already recently and there's good in that update too. ( and the raise and the lending set up for if needs be I get/ respect )
'The bad ' is alarm bells ringing in my head around the following:
''Colin suggested he get a full progress update from MMP and then publish it in its entirety and un-edited by the end of next week. I agreed it was a good idea. (Although I wouldn't be surprised if it appears the week after next).''
I was expecting he gets ongoing regular progress reports from MMP - site preparation is a subject for ongoing discussion for eg, even while the plant is in many week storage/hold by the border, but especially around this time of border opening he should be being briefed on this too I'd offer - and could have summarized the - at least near - current state of play on that call with you ? eg What is his latest best guess on the plant crossing the border and broadly what's left to do on site preparation etc.
My - cynical perhaps, but he has much form - guess with this full report idea is that timeframes for 'ard rock are slipping further again one way or other, and CB has at least deduced that already but 'awaits official' confirmation.. hence this written report idea directly from MMP ?
(Very happy to be wrong on this and I'm much more in this for range trading than long-term hold and all this is perhaps opening up more range trading opportunities again as we go etc. )
Thanks for taking the time updating us on your chat with CB.
You mentioned that there was talk about GF and BE being mined concurrently, I had always assumed this was the case from reading the RNS which made it sound to me as if each contract would have its own processing plant required to be onsite 2 months after each contract was signed, from your comment I assume I have misunderstood?
Yes agreed. Its all very frustrating. I'll believe the $200K income by end of year when I see it. It is substantially more than his previous guidance a few months ago.
Although CBs comms is terrible, as is his forward guidance. I still believe the mine will be built and therefore we will get a substantial rerate in SP.
However, I think that will now happen later then I previously thought.
Many thank for the update. Greatly appreciated.
I’m sorry if CB is upset at the inaccurate and un-informed posts, but that’s a reflection of his poor comms. If he communicated with all shareholders as he has done with you, then we would all be fully informed and there would not be this lack of understanding.
From what you have just said, it appears that he will soon be doing that. I hope so.
The $200K a month income from GF and alluvial II combined by year end is new info and , is substantially more than his previous forward guidance stated in the pay wall chat room pod cast a few months ago.
Thanks again for the update. Lest hope you are out of a job soon as Xtract PR man :)
I have no sympathy I'm afraid. When he took over he promised to be open and keep us informed 'Good or Bad news' He's just not done so. (apart from maybe with you CE which, whilst welcome, should come through official channels).
I understand, and take into consideration, the current issues but we've just had years and years of missed deliverables and off the cuff comments in interviews which of course leads shareholders speculating! (what else are we supposed to do? ofc they are generally negative as it's the norm with XTR) - I'd assumed we were at the end of that with the 'PR' bloke coming onboard but lets not mention his efforts to date.
OK - now I've slept on it the loan, as insurance, is maybe not a bad idea (hopefully we never need it) - I'm still Pi@@ed at more dilution especially as, based on your figures CE, '$200,000 by year end' would be enough to start the drill programmes. Especially when we've still not been officially informed that the Australian deal has been ratified, could he really not wait a couple of months and save the negativity of dilution?
Hello LittleWing "upset" was my summary interpretation of how Colin responded, perhaps I erred on the side of brevity as "angry/indignant/confused" could equally fit various aspects of the bill, but he didn't use any of these specific words.
Sorry if I mislead you - it was not intentional.
Incidentally if some of the posts including my own motivated Bird to feel the need to call CE then at least he will be aware that he now does need to deliver. As a long term large shareholder here I do not appreciate his whining about being "upset". Maybe now he can empathise with how long term shareholders have been feeling. OK it is what it is... lets see where we are at by the end of 2020.
Many thanks for that CE.
So, Colin called me.
He read this BB yesterday and he was quite upset about there being so many inaccurate and un-informed posts.
We spent a long time on the phone and covered a lot of ground so I don't have time, or the memory capacity, to report the conversation verbatim, but these were the salient points ( items in brackets are my own comments and not Colin's):
GF contractors well advanced with GF surface stripping and first income from both Alluvials and GF due by early November. ( given past experience, I would probably say mid-end November, but I could be wrong.)
There was talk of mining GF and BE concurrently - CB hopes to clarify this in the near future ( I guess it will depend on output from GF and their processing capacity).
$200,000 monthly income to XTR expected from GF and alluvial II combined by year end.
4.5Kg of gold about to be shipped to Dubai.
Colin suggested he get a full progress update from MMP and then publish it in its entirety and un-edited by the end of next week. I agreed it was a good idea. (Although I wouldn't be surprised if it appears the week after next).
There was a large appetite for the fund-raising and we could have raised £1.5M, but it would have been at a lower price and would have caused unacceptable dilution to existing shareholders. The board decided that a lower value placing and priced at Bid would produce the least dilution whilst covering imminent cashflow and project funding obligations. Very few companies manage to complete a placing at market price, so very pleased with the result.
CV-19 is causing chaos all over the world and nobody knows what is around the corner - if there is another flare-up in Africa then funding will be very difficult to achieve so it was decided to get the loan option as a form of insurance. It costs over 1% of the MC, but is peanuts compared to the damage that would be done if we ran out of money during a flare-up. As with all insurance, you hope not to have to use it, but its a life-saver when you do.
Colin is not sure why TW turned on XTR, Colin puts the drop from 2.2p down to a concerted campaign by TW, Colin has always been very supportive of the guy, he put over $200,000 into TW's first company and even wrote out a cheque for $25,000 just a week before TW closed the doors, so Colin thinks that TW's actions now are a bit of a kick in the teeth.
TW was trying to broker an equity-backed loan that had a lot of onerous clauses and CB thought it would be the "kiss of death" so he turned it down. (It would be shameful if TW turned on Xtract just because he lost out on a brokers fee!).
FairBride, once up and running, will be worth $500,000+ per month to XTR, after expenses.
OK, I think that's about it. I will post anything else that comes to mind.
A4444, Bird did say that they weren't doing nothing,the groundworks where being completed so installation work could be done as soon as plant arrived on site...but what do we believe ..who known now
South Africa to Mozambique Slight delays / disruption Land borders open with extra checks Slight delays / disruption
Many thanks for the update.
I would like to think all the mine prep work in Moz has been completed by now, especially as the shipment has been delayed for months. I can only know (or think I know) what CB has said and he has repeatedly said once the borders are open the mine construction can start. He didn’t mention any other delays re prep work due to MMP project manager being in lock down etc.
I appreciate that you have said some posters are making ‘unfounded speculation’, but that’s down to the void CB has created due to not keeping all shareholders fully informed imho. I don’t believe CB has ever given the news, in a public forum, re MMP Proj manager and lock down.
I agree with you: a ‘full and factual operational update’ is definitely required and would be helpful to all shareholders. Or put another way, CB improves his comms and that may stop the 'unfounded speculation'!
Thanks again for the update. We'll see if CB gives us an update re shipment this month.