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johnswan1 - From the RNS dated 12th August 2021...
"The Company was pleased to be informed by the New South Wales licensing authority that it is proposed to renew the exploration licence covering the Racecourse deposit and adjoining prospects for a further three years until June 2024"
The focus at the time was naturally on the 'Racecourse' licence (EL7754) but they renewed them all at the same time.
Thanks Steve, do we know that they have renewed the other licenses? The presentation shows they were up for renewal in June and Sep of this year.
Cornford article
"I haven’t mentioned Xtract Resources for a few months – after the last time saying that, following the initial excitement on the long intervals of copper shown by the initial drilling of Racecourse, the rather low grades disclosed by later drilling meant that initial expectations of a 2 million tonne copper resource that would attract Anglo American might be misplaced. I didn’t suggest selling (as I was tempted to do for my holding) because, as always in these situations, it is difficult to know what other investors will do when the resource still looks more valuable than the then share price.
As it is, the shares have drifted back to the low 3’s (and a low £30m market cap) reached when early holders had cashed their profits from the initial spurt from the 1’s to the 7p’s. The latest drift hasn’t been helped either by fewer excited blogs from CEO Colin Bird. But with all drilling results now in, and a new, apparently separate, resource discovered less than a mile away and named Ascot, news is due soon on an up to date economic model. This will be for a larger open pit than was assumed for the earlier estimate of 400m tonnes contained copper at Racecourse, and might also add a preliminary estimate for Ascot.
So, while investors are assuming Racecourse won’t meet the 2m tonnes copper target, what may still be worthwhile in their own right are the still unexplored Ascot and Footrot prospects, which might revive interest. That is especially so because a recent Queensland deal established a US$170m price for a smaller deposit (670,00 tonnes) than Bushranger. It is, however, more developed, with a Preliminary Economic Analysis under its belt and possibly better economics. So it’s all eyes on Xtract’s own forthcoming reports."
At the bottom of the article John Cornford gives an update on his current veiw of extract.
Just waiting like the rest of us.
https://masterinvestor.co.uk/commodities/does-lithium-offer-hope-in-a-tough-mining-climate/
What's to stop XTR from using the payment from the sale of the 80% to fund their 20%, it'll be built over a number years so the full amount wouldn't be payable on day one.
Don't know if it would be a good idea, but at the very least it gives them time to find a buyer for the 20%.
...... was it Aristotle that also said.... the sum of the hole(s) gets bigger the closer you get to 2MT?
Jamsie - XTR could use all sorts of delaying tactics to avoid dilution through cash calls whilst looking to offload their 20% stake... they'd have to endure junior partner pace for at least a while. Anyway, I don't see AA trying to play hardball, especially if they want the other licences. Either way, we seem to be splitting hairs as we are pretty much in agreement.
It is weird but the board always seems to circle back to discussing the buy-back clause whenever there is a lull in news! And I always seem to get sucked in!?! Can't be doing it again... wake me up when the next RNS lands! ;)
Wasn’t disputing that, more your comment that they would have to go at the pace of the junior.
I fully agree they are likely to want 100%, but obviously they have the ability to buy 80% at fair value and then dilute XTR down with cash calls etc which could be there preferred route if XTR try to push them to much on the 20% they don’t have the option on.
johnswan1 - It can be confusing getting to grips with what the buy-back clause relates to because the terms 'Bushranger' and Racecourse' are used interchangeably and neither provide an accurate description of an actual asset.
'Bushranger' is simple the name of the XTR exploration project located in the Lachlan Fold Belt. It consists of four exploratory licences, which includes EL7754 where the anomalies known as Raccourse, Ascot and Footrot are located (as you correctly say). The buy-back clause only applies to licence EL7754 and not the remaining three neighbouring licences. People can see the location of each licence of the four licences in the following presentation from the XTR website...
https://xtractresources.com/wp-content/uploads/Bushranger-Summary-Presentation_April-2020.pdf
Jamesiecakes - You may be right but it is difficult to say because none of us have seen the actual buy-back clause and are relying on published snippets that are paraphrased. Either way, that is nothing to indicate that XTR would be prohibited from selling on their 20%, which could see AA forced into bed with a rival. I personally don't think they'd want that and would therefore pay a fair price to acquire the lot. Time will tell.
Steve
I don’t think that’s quite right, assuming AA only brought 80% then the partners are required to pro rata the funding, if XTR can’t do this there WI is diluted down and they will ultimately end up with a 0.75% NSR (the power point doesn’t make it exactly clear how this works).
John
The buyback is clearly for 80% of EL 5575, CB just aspires to sell 100% of it and the other licenses.
Cheers
James
CB has already clarified that the buyback relates to everything at Bushranger, i.e. Racecourse, Ascot and Footrot.
Richardo - If AA don't acquire 100% of the EL5574 asset, then they are not fully in control in terms of development i.e. they can only go at the pace of their junior partner.
And then there is the risk that if they don't buy the lot, then XTR could potentially sell their 20% to a rival, which would not be a good place to be in.
But it isn't just the 20% for EL7754 that AA might have to pay a premium for. There are three neighbouring licences held by XTR, which are not subject to the buy back clause. We already know Bushranger is a multi-porphyry system but how far does it extend and can AA risk not picking up the neighbouring licences to find out? Imagine passing them up and they end up in a rivals hands who end up making billions that could have been theirs and processed from their single Bushranger plant... that would be a costly and embarrassing mistake.
I guess Aristotle summed it up nicely... "the whole is greater than the sum of its parts".
> AA 80% rather than try and negotiate top dollar with AA for everything.
That doesn't make sense to me. Why would AA pay 'top dollar' premium to get an extra 20% when for a fairer price they can still get 80%?
Thanks for the explanation.
It's not SOLG that News is talking about but GGP. There was an independent valuation of $60m for a 5% Newcrest option on Havieron. Newcrest declined to take the 5% (in August I think), which meant they thought the independent valuation was too high. I suppose that could be good for us if it means independent valuations don't automatically favour the major involved, but not sure that was using VALMIN code anyway.
https://www.lse.co.uk/rns/GGP/option-for-5-havieron-jv-interest-set-at-us60m-9pannefn7vzy985.html
https://www.lse.co.uk/rns/GGP/havieron-joint-venture-update-zf81twol25peprd.html
Incidentally, even at $60m it suggested that the GGP market cap was too high.
Leave that to the others to answer.
ok thanks. not so clear from your post. any context, ie did the indy valuer value up, down, etc compared to what the explorer was asking?
Right thread.
Everyone was discussing the Valmin code - XTR valuation also may have to go to an independent valuation relating to Bushranger re:AA.
So, everyone wanted to know how Havieron's independent valuation would turn out as that was agreed by both JV partners.
So, just updating in case, no one discussed it as everyone was waiting for the valuation to come out. I was busy and could not post.
Wrong thread. Maybe meant for SolGold thread?
Independent Valuer has come and gone.
Us folks were waiting for the valuation to come out on another explorer.
The 5% was valued by the independent valuer to be $60m.
The rest $300m from recall but check of the 25%.
Total implied was $1.2bn.
The major did not seem to like it?
I did no research at all when I bought my shares. I just read the forum posts and thought I'd have a swing at it. It's a 100% punt for me as I know zero about mining. I'm happy, no point in grumbling. Keep the faith.
Thanks for replies
My 'SP' target is a sale of the Bushranger mining rights (ie a sale of PrsopectOre back to AA or to some other party). I will take, and be happy with, the proceeds of that. Guessing the value in advance is not that helpful in my mind. I don't see any reason to have e.g. 20p as a target and sell at 20p before I know what ProspectOre will be sold off for. Will I retain my shareholding in the remaining business of XTR after that? Doubt it very much. Unless of course Colin Bird tells Zak he has found something 'very very big' on the eastern border of Ukraine.
>> Steve4077... can I ask... what is your SP target here for your investment and what have you read in the RNSs that makes you conclude that target is reasonable ?
Firstly, its not based just on XTR RNS, because there are other sources of information, such as Empress RNS, copper/gold prices, Chinese copper purchases, the licence applications on the NSW system, recent sales such as Jose Maria and Eva, comparable grade mines such as Cadia, other economic indicators, etc.
Unless there is some form of industrial incident, it seems reasonable to assume that Fairbride will be close to max production by the end of the year. That gives us a pessimistic estimate of around $5-6m income after tax, which is way more than our 1.3m annual burn rate and makes us a profitable exploration company. That in itself puts us in very good shape in the current economic environment and doesn't include other hard rock and alluvials or future growth in MOZ. In effect Fairbride de-risks the company so there is a little apparent long-term downside - apart from some Black Swan event.
On the upside, we have Bushranger. Even with a super-pessimistic view, that is at least 1m tons for Racecourse at 0.3% (same grade as Cadia) and probably more like 1.5m tons. We've also seem some very interesting results at Ascot, including 15 g/t gold intercept and a 1.8% copper intercept that was lined up with the 0.58% from hole 35. I would really like to see more drilling at Ascot, but the fact that Colin is not following that up suggests the team is very confident about what they already have. Otherwise, with income available I can't see a logical reason why they would not drill it.
Next Racecourse is in a perfect location. Its a low-risk jurisdiction, in a known mining district with existing transport, power and housing infrastructure, close to a major port. You couldn't really get a more attractive location for a mine. Its also ideal for open pit, which is the cheapest and easiest extraction method, and we even have confirmation that metallurgy is suitable for 90%+ extraction rates
The main concerns for me are copper price and interest rates, both of which will have a major impact on the NPV calculation, but I think Colin is old enough and wise enough to take that into consideration and conduct a sale when those are more favorable.
So that gets us to NPV for Bushranger. Even at $500m, which is a very pessimistic estimate, we probably sell for $150m, which is multiples of the current market cap. If we have more resource than expected, or gain a premium for the rest of the licence due to potential, or copper price goes back to similar levels to recent months, we are looking at $1b to $2b NPV and getting up to hundreds of millions in sale price.
The current share price could be frustrating if you want to sell now, but why would you? I have patience and confidence in the assets so in summary its hard to see a downside and the upside is anything from very nice to amazing.
Steve4077... can I ask... what is your SP target here for your investment and what have you read in the RNSs that makes you conclude that target is reasonable ?