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Wouldn't the long term plan be to develop an underground mine ?
Joeman, the problem is spending the profits on exploration doesn't guarantee shareholder value. That's why the SP doesn't move. That's probably why the SP might only move up a small amount when revenue starts coming in.
If we keep spending all our money on the next big thing, when will we see a return?
Colin is very wealthy, this is a fun treasure hunt for him.
I think I should have made it a bit clearer I inflated the 2017 DFS costs of 556 by 20% to 667, I didn’t apply 20% inflation thereafter e.g. I used a constant direct cash cost of 667/oz in my calculation!
I had in my head that the alluvials would last till the end of next year, however maybe CB said that in 2021….I’ll double check my notes however end of the day the impact would be quite small.
Agree that we are unlikely to see any cash from Manica or others as it will be used on BR/other potential projects. However obviously as I wasn’t including BR in the valuation it didn’t make sense to me to incorporate the drilling expenditures.
BizzyLizzy, I agree with you that the market is assigning 1-2p for Manica and the rest to BR. However in my view and based on my numbers it should be more like 3.5-4p for Manica and the rest and hopefully this difference will be reflected in SP once Manica starts proving its cash flows to the market.
Cheers
James
Bizzy, I cant see us directly benefitting from the Fairbride money (in terms of say dividend payments).... but we will have a war chest to support exploration without dilution....that will support the share price more than anything.
I think those figures James, are much more realistic than others I've seen before.
One minor point. It looks like you are expecting Alluvial income to continue for 1.5 years. I believe CB has said they will finish in a year from early this year, or by end of this year, so we may only have 6 months, maybe 9 months left.
If I convert your figures to gross income (not profit) per year in $, I make it about $1M gross a month : $12M a year gross.
Last month I calculated the yearly gross figure as $10M to $12M a year , excluding Eureka, as I had no idea how much that would contribute and moreover when. So our figures are similar.
I think using 20% inflation could be described as Uber Conservative when it comes to our value.... or is it uber pessimistic when it comes to the basket case that our world is becoming?
I remember 20%+ inflation and mortgage rates at 15% in the early 80s. By the mid-80s, we had a massive boom. Although the leadership then was far more decisive.
James, just a couple of thoughts
Clearly discounting, particularly in current interest rate environment, will have big impact. Secondly and my main point, I see lots of comments on XTR around the non Bushranger cash flows supporting current share price by themselves. But will shareholders ever realistically see more than a smallish % of that cash. Can only see most of it funding current and future exploration activities. Hence it is by and large Bushranger and those other existing/future exploration activities that the market will assess to determine the share price, not the cash flows from Manica etc.
I think current SP range of 4p-6p is basically market giving 1p-2p ish to all the Non Bushranger income and the rest is a bet on likely success of BR sale process. The 1p-2p element may rise (by 2p or so) when we get actual income from Fairbride, but beyond that it’s just the Bushranger 2MT/Decision to Mine or announcement of AA negotiations that will deliver the upside we are all hoping for.
I think using 20% inflation could be described as Uber Conservative when it comes to our value.... or is it uber pessimistic when it comes to the basket case that our world is becoming?
A dull day in the office had me messing around on my XTR valuation, all done from July forward (excluding BR as valuing that is beyond my pay grade).
General
Gold Price, 2022: $1850, 2023 $1800, 2024 forward $1750
Tax: 32%
Production costs 6%
Ex rate 1.25
Fairbride
3000/oz per month for 5 years
23% Share of Net Profit
Direct cash costs $667/oz (DFS cash costs of 556 with inflation of 20%, this is a finger in the air job on my part)
No Tax benefits from losses/amortization of assets (from memory Manica was valued at approx. GBP 10m in the last set of accounts so depending on how this is amortized should be quite a nice offset to the Taxation XTR are required to pay).
Running this through I get approx. GBP 22.5m
Guy Fawkes & Boa
320/oz per month for 3.5 years (assumes 120 tonne per day and 1.91g/t GF and 0.77/t Boa)
XTR get 13% of GF net rev & 10% of Boa (the 10% is a guess to factor in the different rates for pay above 30m and below 30m)
No costs (all in Alluvial)
Running this through I get approx. GBP 1.5m
Alluvials
1700/oz per quarter for 1.5 years (1700 average of last 3 quarters)
XTR get 26%
Gold discounted by 10%
Total costs $250k per quarter.
Running this through I get approx. GBP 2.5m
Other projects
Unsold gold from Alluvial: GBP 1m (I reckon we have around 924/oz)
Manica upside: GBP 5m (extension of FB by say 1 year/new discovery made which would then be a 50:50 with MMP)
Eureka: GBP 0.5m (a wild hopefully conservative guess on my part)
Other: GBP 0.1m (Kalwenga/Chong wei again no basis for this)
Corporate OH: -5m (assumed GBP 1m per year for 5 years)
Cash: Assuming we are at or close to GBP 0m
Total value excluding RC = GBP 28m
To be clear I haven’t discounted any of the cashflows, however I have tried to be conservative (and hopefully realistic) on the other inputs. Happy for others input in particular where people have a different view to me (or flat out think am wrong)
Cheers
James
I agree to a large extent Lucky. Lots of us were about talking about a SP up to 40p before we even knew about ASCOT. Now everybody appears worried about ramping, and are talking about a lower SP without adding in anything for Ascot. On a minor point I disagree slightly that you included Footrot as so far I think Colin has only indicated he wants to drill a couple of holes in Footrot. He has not (to my knowledge) said that we will find mineralisation there only that it is worth a shot to investigate.
Cheers everyone, appreciate input and kicking ideas around. Medium to long term and with the continuing global decline of copper grades + increasing demand (post recession) its all good.
Very short term, we’ve got to be about there on final results? FOMO Friday for a Monday release?
We will all see what happens! Colin was banging the 2mt drum, Saying 20/25/30p. That was before ascot discovery and drilling footrot. Now it's......we don't want to give away a cadia!
Well......if we don't get upwards of 50p a share after all this we know for sure, colins been chatting *!$€.
"With copper coming off the boil, has the opportunity to sell Bushranger (short term) been missed?"
According to CB the earliest a plant could be built is 8 years for this scale. And that would be quick ,he said. So I can't see how the POC at todays price would be that important to future sale value. In addition, the LOM will be 25 years min (from 8 years out) so the anticipated POC in circa 2030 to 2055 is what will be important.
I think it will be substantially higher then due to Green revolution and EV requirements.
Commodity prices are much more significant for current production. If there is a 12 to 18 month global recession then POG (and POS) will most likely go much higher as a safe haven asset and store of value.
As we are a Gold miner who is now in production, that may well benefit us.
Thanks for sharing the cadia piece. Interesting reading, the discovery phase certainly employed a lot of ‘wildcat’ step out what appeared blind, drilling programmes. Didn’t appear to have had much guidance from IP surveying to the extent that bushranger has had the ‘perceived’ success. The unmineralised pyrite halo that was wrongly targeted and drilled at Footrot by Anglo, from the IP conducted by them before acquisition by xtract. Wonder if their geologist, that made that call at the time, is watching on to see if xtract geos can hit a sweet spot when Footrot ‘finally’ gets a couple of recon holes in it.
Newcrest did have better success but appeared to have suffered the same misinterpretation from their IP
>>augmented by the detection in an induced polarisation survey of what was later realised to be the upper peripheral disseminated pyrite halo to mineralisation, the blind, high grade Ridgeway deposit was intersected.
Thought this was amusing, what was to be a bad call.
>>a single shallow diamond drill hole 100 m west of the old open cut, intersected 96 m @ 0.6 g/t Au. These values were regarded as disappointing and Homestake withdrew in 1986
Oh dear!
They will use a longer term estimate of copper pricing for valuation that does takes into account these typical and anticipated fluctuations.
There is a suggestion that while there are economic constraints around the world coinciding with 2 large mines coming to production this year, the copper price could be held down for a couple of years until the expected high demand finally follows when the economic climate changes.
So it may not make much of a difference in a final valuation.
Me personally! I could do with the price getting to 11/12 so I can sell 10% of my Holding as it is going to be needed in the next 6 months.
Sq52, I was thinking similar thoughts. Ideally we would of had a high copper price at point of negotiation and no recession on the cards.
I think it could be a dark road ahead for most people financially, whether that's a short road or long, who knows.
At least if we do hold off on selling due to market conditions, we can carry on drilling with the revenue from fairbride. Maybe to find the possible next Cadia?
With copper coming off the boil, has the opportunity to sell Bushranger (short term) been missed?
https://www.ft.com/content/f211f1e2-e080-4d31-96c8-7a0599da77a9
http://portergeo.com.au/database/mineinfo.asp?mineid=mn228
With thanks to FunkySausage and Minor Miner on the GLR site, some might find the above useful for Cadia on a quiet day.
Agree, Colin seems to be in waiting mode. He’s not trying to pump the share price and is leaving plenty in the top drawer to do this when the time comes.
Question is when will this be?
We are still due the EOY statement next week. Will it be along a similar vein or more excited?
Imo it might well show how much Colin values bushranger, the African assets - although important, are a sideshow wrt adding value when compared to bushranger.
I agree CB knew in this dreadful market, singing from the hilltops would have been a total waste of time and almost embarrassing as proven by the damp squib reaction to the SP
Thanks for that vision Cyber LOL
Roughly a third of our market cap in the next 12 months? If your correct Iceberg that means our share price should be around the 12p minimum now based on just these figures alone. Not even taking bushranger into account. £16M in the next 12 months means we are desperately under selling our credentials to the market.
Thanks James
If you can't make sense of the numbers then i doubt anyone can !